Prenuptial Agreements Gain Traction in Asia
Laws vary across Asia, but Hong Kong’s willingness to consider pre-marital agreements triggers a trend. Prof. Kevin Au tells Barron’s that families should ensure their values are instilled in their children at a young age and encourage children to meet friends and eventually long-term partners who share similar values.
Formalising who gets what in the event a marriage falls apart even before vows are exchanged is an increasing trend for Asia’s wealthy, especially those keen to avoid the size of their family’s fortune becoming headline news.
How to warmly welcome your son or daughter’s future partner into the family, and yet ensure the family’s wealth is protected for generations to come, is a dilemma for the region’s wealthy families who know not all marriages last forever. One strategy is for the family to lay down the law and require all members to sign a prenuptial agreement before they get married. This can be stipulated in a family charter or constitution, a document ideally created with input from the whole family.
Kevin Au, Associate Professor of Department of Management and Director of Centre for Family Business and Associate Director of Centre for Entrepreneurship at The Chinese University of Hong Kong Business School says in an interview with Barron’s Hong Kong-based Penta Wealth Management Editor that writing a prenuptial agreement requirement into a family constitution, a practice common in Europe and the U.S., is not as common among wealthy families in East Asia.
The discussion of prenuptial agreements has been on the rise in Asia because recent court developments in Hong Kong has made it more likely these contracts will be considered should a couple divorce. However, couples need to understand the laws in the country where they plan to live as a married couple. In Hong Kong, prenuptial agreements that are freely entered into, which include fair and full disclosure, are likely to be considered, but the conditions are different in each country in Asia.
Prof. Au points out that in China, the agreements are enforceable, but courts in China tend to be conservative, and most families have approached the issue by using trusts and other means to protect their wealth. He also believes a better approach is for families to ensure their values are instilled in their children at a young age and to encourage children to meet friends and eventually long-term partners who share similar values. “Imagine what could happen if your son does not understand the importance of wealth and enjoys a luxury lifestyle, and he doesn’t think much about family values and expectations,” says Prof. Au… Read More (PDF)
Source: Barron’s
Date published: 18 December, 2015
Photo: Barron’s