Guide to Incorporate a Prenuptial Agreement in Indonesia

Most people think of marriage as the ultimate emotional and spiritual bond. They are looking forward to a life of happiness. However when faced with negotiating a premarital agreement, they realize that not only do they have to decide what will happen to them if they divorce or when die, but that they also have to negotiate these issues with their fiancée. It’s not the types of subjects that an about to be married couple likes to think about prior to getting married.

Guide to Incorporate a Prenuptial Agreement in Indonesia

Persons in Need of a Prenup

Consider a prenuptial agreement if you have at least one of the following situations :

1. You are an Indonesian citizen planning to marry to a foreigner;
2. You plan to purchase land or a home in Indonesia during your marriage;
3. You are on a fast career track and are likely to earn a hefty salary in the future;
4. You own your own business or are a partner in a company;
5. You are the person who will bring a lot of assets to the partnership, including a retirement account;
6. Anyone who is paying for his or her spouse to get an advanced degree which is likely to result in significant future earnings;
7. You have children from a prior marriage.

Legal Grounds for Prenuptial Agreement

The prenuptial agreement in Indonesia is honored and can be upheld in court. The laws governing prenuptial agreements (prenup) stipulate that the agreement should be made prior to marriage. The legal grounds for the prenup come from severalapplicable Indonesian laws, including: Civil Code, 1974 Marriage Law, and Compilation of Islamic Law, as follows :

1. Article 47 (1) of Compilation of Islamic Law Article stipulates similar provision with the Marriage Law: “At the time of or before the marriage took place, the bride and groom may enter into an agreement approved by the Registrar of Marriage regarding the management of community property.”
2. The 1974 Marriage Law in Article 29(1) stipulates that: “At the time of or before the marriage took place, with the mutual consent of both parties, they may enter into an agreement approved by the Civil Registrar of marriage, after which it shall also apply to third parties as long as it involves them as well.” Another provision stipulated in the marriage law is that the agreement cannot be amended during marriage, except upon approval of both parties and cannot cause disadvantage to any third party. This stipulation comes from Article 29(4) in the Marriage Law.
3. Article 199 of the Civil Code stipulates that: “From the commencing of a marriage, there shall exist by law, community property between the spouses to the extent that no other stipulations have been made in the prenuptial agreement…”

Making a Prenup

Indonesian law does not provide a ready-made framework for a prenuptial agreement. You and your lawyer have leeway to define your future legal relationship, although you are bound by law, religion, morals, and public order considerations in drafting the agreement.

An Indonesian prenuptial agreement must be tailored to the particular needs of the husband and wife and be sufficiently flexible to take into account changes in your future circumstances during the course of the marriage. Both parties are free to determine the form of agreement, as long as it abides by religious and civil laws. The provisions are indeed very abstract. The legislature seems to leave it that way in order to make it flexible within the influences of religion, moral, and public order.

Begin by collecting all the subjects and items you want to be included in the prenuptial agreement. Ask your lawyer to draft the agreement and request his/her recommendations. Make note that the property purchased in Indonesia will be under your Indonesian spouse’s name. This is necessary because foreigners are not allowed to own property in Indonesia.

For mixed couples what is needed is a prenup which instigates separation of property as the rule so that an Indonesian spouse can legally own and hold property under Hak Milik (Freehold Title) on property purchased. This negates the foreign spouse being an automatic owner of 50% of the property due to the usual joint property rule for married couples in Indonesia. This is one of the most important points of the pre-nuptial agreement and is a requirement for a mixed couple to purchase land/property in Indonesia.

You need to specify the percentage of the combined wealth that each spouse will receive if the marriage was dissolved. Included in the agreement should be full disclosure of all assets and liabilities, including the value of each asset. Ensure that the terms oftheagreement do not promote dissolution of assets.

Keep a copy of all drafts of the documents so that there is a record that you have reviewed every draft. Keep all the drafts, correspondence, and notes so that the file reflects the negotiations and the various resulting revisions. Name and number the drafts in consecutive order such as “draft number three”. This record will be very helpful if the agreement is later contested. After negotiating the agreement, make sure you understand its terms and the importance of abiding by them. An agreement approved by both parties in its entirety is more likely to stand the test of time.

Avoid commingling assets and keep careful records. A qualified accountant or bookkeeper can assist you with this task. Even if the agreement is set aside or revoked, careful bookkeeping will make it easier for the court to trace assets and will save you lots of money.