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Postnuptial Agreements in Indonesia

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Foreword

Postnuptial agreements, also known as postmarital agreements, are agreements entered into after a marriage has taken place, but before the parties seek to divorce. There are many reasons why a couple might wish to draw-up a postnuptial agreement. Among others, a couple that did not sign a prenuptial agreement before marriage may later determine that they want to have some sort of financial plan in place in the event of death or divorce. Additionally, a major change in the financial circumstances of the couple, such as a major career change or inheritance, may alter the financial landscape, requiring a change to the terms of the couple's existing prenuptial agreement to reflect their current wishes.

The harsh reality is that the courts tend to assume that a prenuptial agreement is always valid, but they have the opposite reaction to the postnuptial agreement; the assumption is, in the majority of cases, that this type of agreement is not valid.

Indonesia’s Marriage Law only recognizes prenuptial agreements, ("prenup" for short), a written contract created by two people before they are married. The 1974 enacted law only discussing the matrimonial agreement that must be drawn-up prior to marriage. Indeed, the law regarding the validity and enforcement of postmarital agreements is not well developed in Indoneisa. But if we dig a little bit deeper, Indonesian Civil Code provides special provision concerning property division in the course of marriage.

Property Division in the Course of Marriage

In accordance with Indonesian Civil Code, the wife may, in the course of marriage, request a division of assets, in the following circumstances, PROVIDED FURTHER that the division of assets pursuant to mutual agreement shall be invalid:

In the event the husband, due to patent misconduct, has squandered the community property, and has exposed the household to ruin;
If, due to a husband’s misconduct and mismanagement of his affairs, his wife is in imminent danger of losing the security of her dowry and her entitlements pursuant to the law;
And also if due to gross negligence in the management of the community property, such property might be endangered.

The division of assets shall, prior to taking place, be made public. Failure to do so shall render the implementation invalid. The judgment granting permission for division of assets shall be effective from the date on which lawsuit is filed. The wife, may, during the proceedings, with the approval of the judge, take precautionary measures to prevent the assets from becoming lost or squandered.

Creditors of the husband may intervene in the proceedings between them in order to dispute the claim for division of the assets. The creditors of the husband who have not interfered in the proceedings may oppose the division, notwithstanding that it has taken place, in the event that their rights have been expressly restricted as a result thereof.

The judgment granting permission for the division of assets, shall lapse by law, if the division of assets, which should be evidenced by an authentic deed, does not take place, or, if within a period of one month after the judgment is granted, no legal claims have been filed by the wife seeking division which claims shall be continued regularly.

The authentic deed, although it is not commonly referred to as a postnuptial agreement, may be useful to couples seeking to enter into a postmarital agreement after a significant financial change or a period of marital conflict. It is signed and entered into in contemplation of an existing, ongoing, and viable marriage. This agreement allows married couples to legally pre-determine how property will be divided if the couple divorces.

Legal Implications

Legal implications will occur due to property division in the course of marriage; they are:

A wife, whose assets have been separated from those of her husband, shall be restored as independent manager thereof, and may obtain approval from a judge in order to have her movable assets at her disposal.
Notwithstanding the division of assets, a wife is obligated, in proportion to her income and that of her husband, to contribute to the expenses of the household and the education of the children, borne to her by her husband. In the event of the insolvency of her husband, a wife shall be solely liable for such expenses.
A husband shall not be responsible for his wife, in the event that their assets have been separated and she fails to use or re-invest the proceeds from the sale of immovable assets, transferred pursuant to approval from the judge, unless the contract was drafted with the assistance of the husband, or it is proven that the proceeds were provided by him or have benefited him.

Reinstatement of the Community Property

The community property which is dissolved by separation of assets may be reinstated with the consent of the spouses. This can only take place by an authentic deed.

In the event where community property is reinstated, matters relating thereto shall be afforded the same status as that applicable prior to separation, without prejudice to the result of acts carried out by the wife which took place in the interim between separation and reinstatement. Agreements providing for reinstatement of community property by the spouses for any reasons other than those already specified shall be deemed void.

The reinstatement of community property must be made public by the spouses. Third parties shall not be affected by the reinstatement until the public announcement has been made.

While you certainly can create and enter into a post-marital agreement on your own, having an experienced lawyer assist you, will make sure that all of your assets and financial interests are legally protected and binding in the event of separation or divorce.

Our thanks to Asep Wijaya, Managing Director of Wijaya & Company for his contribution of this article!

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