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September 25, 2018

To sign or not to sign a prenup

When you say "I do," that house, your business and all the assets that you acquire during the marriage become matrimonial property. You acquire equal rights with your spouse over the matrimonial property.

At the time of exiting from the marriage, if the need arises, the same principle of equality controls the question of who keeps or takes what. You have to share the assets with your spouse should you get divorced. The million-dollar question is: Should a “wise, sane” spouse protect and preserve the portion of what they acquire during the marriage to themselves or put it in the joint matrimonial pool?

Which person in their right mind would willingly enter into a contract that could result in them losing 50 per cent of their investment on a whim? Well, they say the greater the risk the higher the reward but this statement may not ring true to any man or woman who has just lost half of their hard-earned money in a judgment in court to a spouse who contributed nothing or who did no hard work to earn or develop that property.

Parties to a marriage can smile since the Marriage Act has created room for prenuptials. A prenuptial agreement is a legal document signed before your marriage that specifies very clearly how your assets will be divided in the event of divorce. In Kenya, division of matrimonial property is based on how much you contributed to the acquisition of the property (Section 7 of the Matrimonial Property Act). Contribution can be direct or indirect or both. Under Section 2 of the MPA, it includes but is not limited to monetary contribution, domestic work, management of the matrimonial home, child care, companionship, management of family business or property and farm work. The court decides how each of you may or may not have contributed to acquisition of your own property. The only exception to this is under section 6 (3) which states that parties to an intended marriage may enter into an agreement before their marriage to determine their property rights.

 The essentials of a prenup are pretty simple. Just like a normal contract, for the agreement to be valid and enforceable, it must be in writing, both parties must sign the agreement, must be voluntary and must not be illegal or opposed to public policy. Specific to prenuptial contracts, it must also be completed before marriage and contain full financial disclosure. None disclosure is fatal. Prenuptials will play a big role when it comes to the time of distribution and or disposal of matrimonial property. Although it will end up commercialising marriages, it will make it easier to exit with what is yours at your convenience.

 Creating a prenuptial agreement implies you don’t see the marriage as “forever.” Prenuptial agreements come into play only when a marriage dissolves. By creating one, you send the message there is a real possibility your marriage will fail.

Secondly, a prenuptial agreement could create resentment between spouses as it makes it seem like there is a lack of trust in one another. That’s a difficult emotional hurdle to get around. Thirdly, a prenuptial agreement is not a crystal ball and it does not necessarily predict the future. In fact, they are mostly founded on current situations. You may marry a starving artist whom you plan to support with your bustling law practice. Fifteen years later, when your artist has hit the big time, you might still have to pay support cheques after the divorce because your prenuptial agreement assumed you would always make more money. How about that?

Even if you sign a prenuptial agreement, if you take the agreement to court, it’s up to a judge to decide the validity and reasonableness of every clause. If he thinks part or all of the agreement is ridiculous, he can throw it out. Section 6(4) of the Matrimonial property Act states that “a party to an agreement may apply to the court to set aside the agreement and the court may set aside the agreement if it determines that the agreement was influenced by fraud, coercion or is manifestly unjust.”

Despite the downside, many have argued that signing a prenup is like investing in a health insurance scheme. It doesn't mean that you're going to get sick, but you're just protecting yourself if the worst should happen. Just because you believe in a God who gives good health or you eat healthy and exercise constantly does not mean you do not have a health cover. I assure you even the priests have health covers!

A prenuptial contract can protect the financial stability of your children. Without a prenuptial agreement, your spouse may receive monies or assets you intended your children to have in the event of a divorce. Moreover, if either the bride or groom has children from a previous relationship, a prenup can help ensure their financial well-being if you get a divorce.

Similarly, if a bride or groom comes into a marriage with a well-established business, she or he might want to make sure to keep controlling interest in the event of a divorce. Or, if one spouses comes into the marriage limping with a great deal of debt (or a newly minted business), the prenup can help to protect the other spouse in the case of bad financial luck. Section 10 of the MPA states that any liability incurred by a spouse before the marriage and relating to the property shall, after marriage, remain the liability of the spouse who incurred it. However, any liability that was reasonably and justifiably incurred shall, if the property becomes matrimonial property, be equally shared by the spouses, unless they otherwise agree.

Prenuptial agreements are a way for a couple to talk openly about their finances, families, legal issues, plans, hopes and dreams. It may help strengthen your relationship by ensuring you’re both on the same page about important issues surrounding money. In the starry-eyed and harmonious time before a wedding, it is an excellent idea to have an open conversation about these issues. Remember, you and your future spouse will be discussing money throughout your entire marriage so there’s no time like the present to start.

The purpose served by prenuptial agreements is subjective based on who you are and your beliefs. But from a legal point of view, one must consider that the legislature is faced with the grim task of enacting marriage, divorce, property and inheritance laws that apply to every married couple in Kenya. This is just how the law works. It does not discriminate (Article 27) and it applies to everyone (Article 19).

Unfortunately not all couples have the same feelings about property rights. Prenuptial agreements are nothing more than a way for couples to modify the laws and to bring them in accordance with the couple’s own views. Some of us will sign it while others will frown at it. The choice is yours. There are consequences. Information is power.

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