Does a Prenuptial Agreement Work in China & How to Prepare it?

In China, prenuptial agreements are useful. What should be noted when signing a prenuptial agreement?  

I. The functions of prenuptial agreements       

1. Clarifying property distribution

Prenuptial agreements can stipulate the ownership of property of both spouses before and after marriage. For example, the two parties can agree that a certain proportion of their respective wage incomes after marriage will be regarded as personal property. To some extent, this avoids potential disputes over property distribution in the future. Especially in the event of divorce, it can provide a clear basis for property division.

For instance, Party A and Party B sign an agreement before marriage, stipulating that a house Party A bought before marriage belongs only to Party A even after marriage. If Party A and Party B get divorced later, this house will not be included in the joint property for division, reducing disputes between the two parties regarding property.

2. Clearly dividing debt responsibilities    

It can clarify how the husband and wife bear debts before and after marriage. Spouses can agree that the debts incurred by one party during the marriage are personal debts and the other party is not responsible for repayment. This is very important for protecting the personal property rights and interests of both spouses, especially when one party may face business risks or incur debts due to bad consumption habits.

For example, Party C is an entrepreneur. Before marriage, Party C signs an agreement with Party D, stipulating that the debts generated by Party C's company operation after marriage are personal debts. If Party C's company runs poorly and incurs debts, Party D does not need to use his or her personal property to repay these debts, thus avoiding Party D being unjustly involved in a debt crisis. Of course, for such an agreement between husband and wife to exempt the other party from the obligation to repay debts, the creditor must also be informed of the content of such agreement for the exemption to be effective.

3. Enhancing marriage stability    

Through prenuptial agreements, both husband and wife can communicate and negotiate on some important marriage matters before marriage, enhancing mutual understanding. In addition, such advance planning enables both parties to view marriage more rationally.

II. Matters needing attention when signing a prenuptial agreement

1. The content of the agreement must be legal

The content of the prenuptial agreement must not violate the mandatory provisions of laws and regulations. For example, one cannot limit the basic personal rights of a party through the agreement, such as the right to marriage freedom (including the freedom to marry/divorce). Agreements to evade legal obligations, such as not raising children or refusing to fulfill the mutual support obligation between husband and wife, are invalid.

In addition, the stipulations regarding property should also comply with the law. For example, agreements involving real estate such as houses should be handled in accordance with the relevant real estate registration system and cannot violate the principle of numerus clausus of real rights.    

2. Written form

Prenuptial agreements are preferably in written form and signed by both parties. Because written agreements have more advantages in terms of evidential effect, they can clearly record the true intentions of both parties. If it is only an oral agreement, it is very difficult to prove the specific content of the agreement and the true intentions of both parties in case of disputes.

3. The principle of fairness and reasonableness

The content of the agreement should reflect fairness and reasonableness. It cannot be an agreement that is grossly unfair because one party takes advantage of the other party's disadvantaged position (such as in terms of economy, knowledge, information, etc.). For example, it is unreasonable to require one party to give up all property rights and interests while the other party bears no responsibility. If the content of the agreement is grossly unfair, in judicial practice, the court may adjust the agreement according to specific circumstances.    

4. Notarization (optional but advantageous)

Prenuptial agreements do not have to be notarized, but notarized prenuptial agreements have stronger probative force. If there is no contrary evidence, the court will generally directly accept the notarized prenuptial agreement. This can more efficiently determine the rights and obligations of both parties when dealing with property disputes and other situations.