Image by The Library of Congress via FlickrFinancial IQ Philippines Quick Hit(s):
Prenuptial agreement is gaining popularity on foreign countries. Personally, I believe it is a good tool as both parties start planning ahead.
Do you recommend prenuptial agreements?
Are prenuptial agreements before marriage already accepted here in our society, or is this just for movie stars and the super-rich? Can a very large life insurance policy bought before marriage be covered by a prenuptial agreement also? Like in the case of a separation, can insurance be used to pay off a spouse? Do you advise couples with lots of properties or assets to sign prenuptial agreements, or will this sour a relationship?
Lawrence V. Del Mundo, 33 years old, single, businessman, Makati City
Answer
Marriage settlements or prenuptial agreements that would govern the property relations of the married couple during their marriage are provided in our law on family relations under the Family Code. The parties may choose among absolute community, conjugal partnership of gains, complete separation of property, or any other regime. We do not have statistics to help us determine the extent of its practice, but most of the married couples we know do not have marriage settlements. We may have heard about such prenuptial agreements among certain personalities only mainly because they are well-publicized. Under the Family Code, in the absence of a marriage settlement, the law provides that the system of absolute community of property under the code shall govern.
Entering prenuptial agreements is dictated primarily by the need of the parties and not merely by the size of the assets. It could be made for the purpose of preserving one’s family properties, or for providing for the needs of family members from an earlier marriage, or for simply defining the property relations between spouses during the marriage. However, since discussions on property relations could be emotional, it is best that the parties are already mentally and emotionally prepared before they enter into prenuptial agreements; otherwise, as you mentioned, it may contribute to the souring of their relationship at that point when they are already preparing to get married.
A life insurance policy, just like any property, can be the subject of a prenuptial agreement. As such, it could properly be covered by the agreed upon property relations between spouses. However, I do not think there is life insurance that will pay benefits in case of separation of spouses (legal separation or annulment) to “pay off” a spouse. As we know, in life insurance, the contingent event that triggers the payment of the basic benefit is the loss of life of the insured.
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