Foreigner’s Guide To Prenuptial Agreements in the Philippines- Protecting Your Money

While some consider an older white male marrying a younger Filipina taboo, I don’t judge personal choices. Marriage is a personal commitment between two people that is, well, “personal.” There are lots of reasons to marry. My partner is 15 years younger than me. If two people want to spend the rest of their lives together, it’s none of my business.

However, expats need to understand and protect themselves from the financial disaster of a potential divorce.

“Marriage without a prenup is like a sunny day without sunscreen – it’s great until you get burned!”

It’s not about love. It’s about facts. Half of marriages fail. Have you been married before? You are really rolling the dice, then. “67% of second, and 73% of third marriages end in divorce.”

When we are in love, we are hopeless romantics. While we know that 50% of married couples divorce, we put the odds of our own marriage at less than 12%, which explains why only 1 in 10 marriages use a prenup for protection.

A premarital agreement is a requirement, especially when there is a vast wealth disparity and local laws favor citizens over foreign expats.

This guide details why expats need a Philippines prenup, addresses typical mistakes, and breaks down common myths. You can make informed decisions about the pros and cons and protect individual assets from potential financial disaster.

The Philippines is one of only two countries where divorce is illegal. The second is the Vatican, so the Philippines holds the sanctity of marriage in as high regard as the Pope.

In the Philippines, marriage is an essential institution governed by the Family Code. This code, also known as Executive Order No. 209, became effective on August 3, 1988. Generally, marriage in the Philippines is governed by the law and cannot be changed just because the couple wants to.

Although divorce isn’t recognized in the Philippines, the courts grant ~10,000 annulments annually, and they recognize legal divorces between a foreigner and a Filipino citizen that are completed in another country. Provisions in the Family Code have specific rules for dividing property if a couple separates.

Couples can create a pre-nuptial agreement, also known as a “marriage settlement,” “ante-nuptial contract,” or casually as a “prenup,” to determine how their property will be handled during their marriage.

Prenups here are more enforceable than ones in the West, where a judge can overturn an agreement…as long as the prenup agreement is executed according to the law of the Philippines…it becomes very enforceable.- Dumaguete Family Attorney

If you are from the US, you may have heard the terms “equitable distribution” or “communal property” regarding divorce. Equitable distribution is the system most of the United States uses for the division of properties following a divorce. Communal Property is an alternative method practiced in California, Texas and seven other states.

I won’t get into the differences between the two systems as the specifics differ depending on the state, and neither system is practiced by the Philippines. However, generally speaking, in the US, inheritances, and property you acquired BEFORE the marriage (savings, stocks, houses, etc.) are considered separate and not part of the marital assets to be split.

This separation helps protect a wealthier spouse who brings more money and assets into a marriage.

The Philippines practices a more financially punishing absolute community property system.

When all properties are acquired by the spouses before their marriage and all properties acquired during their marriage, it will be considered as part of one whole estate of the absolute community of property, which is owned by both parties- Attorneys of the Philippines

This system states that the couple owns all assets, debt, and income jointly. You are financially responsible as your future spouse for any debts. On the flip side, any property you own, past, present, and future, will be split 50/50 in a divorce.

This system can be a financial disaster for someone who scratched, sacrificed, and saved all their lives to build a little savings so they could comfortably retire in the Philippines.

Once you say “I do,” an absolute community property regime means that with only a few exclusions, all your personal hard-earned savings and money are no longer “personal” but shared property of the marriage.

What is also shared is any debt. Even without your signature, if your spouse racks up a mountain of credit card debt buying the latest Gucci or takes out a car loan for a luxury Mercedes without your consent, those bills become your bills.

Exceptions to Asolute Community include:

• “Gratuitous” properties or assets received without pay after the wedding. Usually, these are donations or inherited assets.
• Personal property such as clothing and, for some reason, jewelry.

INSIDER TIP: Prenuptial Agreements and Property Ownership In The Philippines – A prenup agreement is especially crucial for foreigners marrying in the Philippines due to legal restrictions on property ownership. Foreign nationals are not permitted to own land, so a prenuptial agreement would be one of the few protections foreign spouses have regarding property rights.

All your wealth is up for grabs in a divorce under the Philippines default property regime. Even A house you bought, built, and paid for can be snatched away.

However, things are not hopeless. Prenuptial agreements are legal documents that you and your spouse agree on BEFORE (hence the “pre” in pre-nuptial) getting married. These contracts outline the distribution of assets, debt responsibilities, and financial rights and duties each spouse will have during a divorce or separation.

Money Issues are one of the top three causes of divorce. A well-crafted prenuptial agreement is a fair approach to dividing assets and debts should the marriage dissolve, thereby reducing potential conflicts. A prenup agreement assures that the allure of wealth or unspoken expectations of a massive lifestyle upgrade do not influence the marriage.

Prenups provide financial honesty, clarity, and transparency before entering into marriage.

Once a foreigner and a Filipino couple sign a pre-nuptial agreement, it becomes an official contract. The Family Code laws become a backup and only kick in if no prenuptial agreement exists.

I consider the default System of Absolute Community financially risky for any expats with more wealth than their future spouses. With a prenup, there are other alternatives.

Philippine prenuptial agreement might not cover your US assets. The Civil Code Of The Philippines explicitly states

“ARTICLE 16. Real property as well as personal property is subject to the law of the country where it is situated.”

If you are an American marrying a Filpino, I highly recommend consulting lawyers from both countries. This measure ensures individual properties are correctly classified and protected under the law of those lands and the prenuptial agreement.

While you can execute a prenuptial agreement before the wedding, you cannot do anything about it afterward – the law expressly forbids it. It’s considered part of the marriage contract and can’t be changed unless there’s a court order to do so.

The Family Code itself provides in Article 76 that marriage settlements cannot be modified except prior to marriage. – Philippines Supreme Court Justice Roberto A. Abad

The court would consider intervention when a prenup is not legally sound if there was a lack of consent, fraud, coercion, undue influence, or bad faith.

A legally sound prenuptial agreement in the Philippines has critical requirements to ensure its enforceability. It would be a terrible oversight to assume your assets were financially protected by a prenup only for a judge to throw out your prenup because of a mistake.

Both parties must sign the agreement without coercion or undue influence and provide voluntary consent. It’s also essential to indicate that both parties had independent legal advice.

Like most legal contracts in the Philippines, an authorized officer or lawyer with notarial commissions must notarize a prenup agreement for it to be binding and valid.

Additionally, Philippine lawyers recommend registering your prenuptial agreement at the local civil registry, where your marriage certificate is recorded. While not required for the prenup to be valid, it becomes essential if the couple wants to include third parties like family members or creditors in the agreement.

A registered prenup ensures affected 3rd parties understand the property arrangements between spouses.

Case Study Why Registration Would Be Important

Let’s say Mr. Joe Expat and Ms. Maganda get divorced. Ms. Maganda has a considerable student loan debt of $22,000 USD or over 1.2 million Philippine Pesos. Absolute Community of Property applies if a registered prenup is not in place. Debt collectors can hold both spouses responsible for the debts.

A comprehensive financial statement of both parties’ assets, liabilities, and income should be provided before the signing. A full disclosure avoids fraud, mistake, misrepresentation, or concealment of assets, which can be grounds to nullify the pre-nuptial agreement.

Financial statements should include (not an exclusive list):

All prenups should include an arbitration or mediation provision. Divorce lawyers can rack up some insane fees. Having an alternative method for resolving disputes without expensive, drawn-out court fights is smart.

It also encourages the couple to talk openly and work actively to solve issues. This is better than just letting lawyers decide.

Remember, there a post-nuptial agreement doesn’t exist in the Philippines. The prenuptial agreement is your one chance to add any financial stipulations to a marriage contract.

The future spouses have the freedom to include any provisions in the agreement as long as they are not illegal, contradict established morals and customs, go against public order or public policy, or infringe upon individual liberties and rights. While you can’t add things like requiring your future to do all the laundry and dishes, you can add an infidelity clause.

Additionally, there should be a severability clause. If any part of the agreement is found to be invalid or unenforceable, severability ensures the whole agreement does not become invalid. This ensures that even if one provision is not enforceable, the rest of the prenuptial agreement remains valid and can still be enforced.

Your pre-nuptial agreement can include a “Choice of Law” stipulating what countries governing laws will apply to the contract. As a foreigner, you can even choose”the governing”laws of your home country or state. If you don’t choose, the laws of the Philippines, regardless of where you currently live or were married.

Philippine laws do not apply to properties located outside the Philippines. Article 16 of the Civil Code passes the jurisdiction of property outside the Philippines to the laws of the country where the property is located.

Any American getting married in the Philippines should consult lawyers from both countries to correctly classify and protect your assets with a prenup.

A husband and wife are legally obligated to support the family. If your spouse doesn’t work or you are the primary income earner, the states

The amount of support…shall be in proportion to the resources or means of the giver and to the necessities of the recipient.- ARTICLE 201 FAMILY CODE

Even if you are legally separated (de jure), you are responsible for paying for food, housing, clothing, medical care, education, and transportation until a Philippine judge annuls or voids your marriage in a court petition.

However, the financial terms and specifics are ambiguous.

How much spousal and child support is required?

Does it mean your spouse never has to get a job?

Are you responsible for paying for your kid’s college?

An agreement in writing provides a framework for addressing any financial support needs arising after a divorce, including the amount, duration, and payment method.

One of the few exclusions allowed under the default absolute community property regime is any assets you inherit during the marriage. Your prenup should also articulate that any inheritance received during the marriage shall remain separate property.

70% of Filipinos struggle with debt . While often overlooked, you could be in for a nasty surprise if your prenup doesn’t address current and future debts. A solid prenup should define which debts will remain personal and which will be shouldered by the other spouse or jointly. Also, it should clarify how any future debt amounts incurred during the marriage are handled. Future liability is especially critical when one spouse plans to start a business or borrow money to return to school.

Many foreigners marrying in the Philippines are on their 2nd or sometimes 3rd marriage. If any prior marriages involved children, the previous marriage assets could potentially be excluded from the communal property pool of the current marriage under the Absolute Community Of Property system.

The intent is to inheritance rights of children from a spouse’s previous relationship; however, defining and tracking those assets can get complicated.

It is safer and less complex for a prenup to specifically call out specific assets for the children involved to ensure they remain untouched in the event of a divorce or separation. This provides peace of mind, ensuring a fair share of property for these children and preventing inheritance disputes.

The cost of a prenuptial agreement in the Philippines varies depending on several factors – complexity of the agreement, number of assets involved, total assets value, the extent of protection required, and the most expensive variable- the legal consultation services used.

Legal fees vary widely based on attorney experience. Here is one recent 2023 quote for 35,000 PHP / ~$630 USD for a Cebu City attorney to draft a prenuptial agreement for a retired foreigner and his Filipina fiance.

The average Philippine prenup costs between 20,000 to 50,000 pesos. The main driver is the rate for an attorney. The Integrated Bar of the Philippines (IBP) standardizes at a minimum of 1000 PHP per hour; however, expect attorneys in Metro Manila to charge closer to 2500 PHP.

At a rate of 2500 PHP per hour for a lawyer, the estimated Total Cost Of A Prenuptial Agreement In The Philippines is roughly 50,000 PHP or about $900 US Dollars. Let’s break down the different drivers to see where you might save money.

Outside of legal fees, prenup costs are minimal.

• Estimated Notarial Fees: 500 PHP
• Registration at Local Civil Registry (LCR): 500 PHP
• Bureau of Internal Revenue (BIR) Documentary Stamp Tax: Exempt
• Registry of Deeds Annotation Fee: based on property value

Legal fees will be the biggest expense. The best way to save money on the cost of a prenup is to keep it simple. A complex prenup involving multiple assets, foreign assets, or tricky negotiation situations may require a more expensive, experienced lawyer.

While technically possible, writing a prenuptial agreement yourself to save money is the “A Pennywise, But A Pound Foolish” times 10. Don’t risk your entire financial well-being to save a little bit of money. Prenuptial agreements deal with complex matters of law and finance; errors can make the agreement unenforceable.

Affordable legal advice from Family Law Attorneys

A legal expert can provide insights, align the prenup within the framework of the law, and ensure full disclosure and fairness. They can guide you on crucial elements you might miss, confirming the agreement stands up in court if disputed.

The default Absolute Community Of Property rule is a financial landmine for any foreigner with money marrying a Filipino with less money. In the worst-case scenario, you are stuck with all the debt, losing 50% of your savings and all your home equity.

However, it’s not all about the money. It’s about transparency and openness. Every marriage should have a prenup, regardless of the money involved.

Couples will spend months planning for a church wedding. It only takes 10 hours in legal time and proper registries to ensure your future plans, priorities, and values are mutually aligned as a couple.

Conversations about prenups can be difficult due to taboos and trust issues. However, having a prenuptial agreement can promote financial transparency and strengthen marriages. Couples can establish trust and clarity by openly discussing financial expectations and responsibilities.

Open and truthful conversations ensure both parties feel secure, allowing them to focus on building a strong foundation for their future.

Talk with your partner, be open about why a premarital agreement would benefit you both, and seek the help of a legal professional trained in family law to draft your agreement.