Thailand Intrigue

Prenuptial Agreements in Thailand - Desirable or Effective?

By Joe Lynch, Accredited Australian Family Law Specialist

Lanna Lawyers, Chiang Mai, Thailand

Email: lynchlaw.net.au@gmail.com

A Thai prenuptial agreement is a contract between a couple who plan to marry. Prenuptial agreements are recognised under section 1465 of the Thai Civil and Commercial Code (the “Code”). Prenuptial agreements are sometimes called ante-nuptial agreements and pre-nuptial agreements. The basic essential element is that it is a pre-marriage agreement, or contract, entered into in advance of the marriage.

Thai prenuptial agreements must be registered at time of marriage

Under section 1466 of the Code prenuptial agreements must be in writing and signed by both parties in the presence of at least two witnesses and registered at the District (Amphur) office at the time of marriage where the marriage takes place in Thailand or at a Thai embassy or consulate if the marriage takes place overseas. If the prenuptial agreement is not registered it is void.

Prenuptial agreements cannot be varied without Court approval

After marriage the prenuptial agreement cannot be altered except by authorisation of the Court. (Section 1467of the Code)

Post-nuptial agreements are voidable

Any agreement between a husband and wife during marriage (a post-nuptial agreement) may be voided by either party during the marriage or within twelve months after divorce provided that the right of third parties acting in good faith are not adversely affected (Section 1469).

When is a Thai prenuptial agreement void

Any clause in a Thai prenuptial agreement that is contrary to public order or good morals, or provides that the relations between the parties with regard to property are to be governed by foreign law is void (Section 1465). This requirement is a good reason not to enter into a Thai prenuptial agreement if another jurisdiction and/or forum allows prenuptial agreements that more effectively regulate the division of property on marriage or relationship breakdown

What can a prenuptial agreement achieve

A Thai prenuptial agreement will generally identify the property that both parties brought into the marriage and may stipulate the basis of management of marital assets rights during marriage. (Sections 1476 and 1476/1). It can also stipulate how assets are to be divided between the husband and wife in the event the marriage is dissolved by death or divorce although this may not be enforceable. The contract should be drafted in both the Thai and the language of the non Thai party. Each party should be independently advised by their own lawyer and evidence provided as to that advice.

The contract and its provisions must not be against good morals or the law. The agreement can only alter the parties’ legal rights on divorce to the extent permitted by Chapter IV of the Code. A provision in a Thai prenuptial agreement that the division of property between husband and wife shall be governed by foreign law is void. Under Thai law the extent to which a prenuptial agreement can dictate how property is divided on marriage breakdown is very limited. It is therefore important to understand the basis of property division on marriage breakdown under Thai law.

Division of property in Thailand is governed by what is known as a community property regime. This regime applies in many jurisdictions in the United States and in a number of other countries. There are two types of matrimonial assets in Thailand and the type of property is relevant to the division of property on divorce. Firstly, there is Sin Suan Tua (Personal Property) and, secondly, Sin Somoros (Common Property).

Sin Suan Tua (Personal property)

Sin Suan Tua (Personal property) under Sections 1470 and 1471 is

1. Property belonging to either spouse before marriage;

2. Property for personal use such as clothing or tools of trade;

3. Property acquired during marriage by way of inheritance or gifts;

4. Khongman, otherwise known as an engagement gift.

However section 1470 provides “Property of husband and wife except in so far as they are set aside as Sin Suan Tua, are Sin Somros” and section 1474further provides “In case of doubt as to whether a property in "Sin Somros" or not shall be presumed to be "Sin Somros". This means that all property is deemed to be common property unless the person asserting that certain property belonging to him or her is personal property can prove this. This is where a Thai prenuptial agreement can, to a limited extent, be effective.

Sin Somoros (Common property)

Sin Somoros (Common property) under section 1474 is

1. Property acquired during marriage;

2. Property acquired by either spouse during marriage through a will of gift declared by such will or document of gift to be Sin Somros;

3. Property that is the fruit of Sin Suan Tua.

In terms of paragraph 3, by way of example, if a wife has inherited shares in company they would be seen as Sin Suan Tau but the dividends from the company would be Sin Somoros. Property that is Sin Somoros is under joint control. The permission is needed of both spouses in dealing with Sin Someros.

Property Division on divorce

Upon the granting of the divorce the Sim Somros (common property) is divided into equal shares between the parties. And each party retains their Sin Suan Tua (Personal property).

Apart from each of the spouse's personal Sin Suan Tua property, a Thai marriage is likely to result in the creation of common property owned jointly or severally by the husband and wife (Sin Somros). All such property acquired throughout the course of the marriage is common property regardless of in whose name the title is held. Unless the parties can agree on how to divide the common property the Court will divide the assets subject to section 1472 of the Code. The general principle applies that 'benefit and income' and the fruit of each spouse's personal property (e.g. rent received from a personal property) acquired during the course of the marriage will be divided equally as joint property between husband and wife. Often property of husband and wife during marriage will consist of a mix of personal and common property. A practical solution to dealing with the financial consequences of a marriage in Thailand is to enter into a prenuptial agreement governing the administration of the couple's finances and property during their marriage. Under Thai law it is not possible to exclude the common property rule in a prenuptial agreement.

An important aspect of a prenuptial agreement is of course the weight given to it in a contested divorce. The Family Courts in Thailand have power to determine the enforceability of the clauses in the contract. Simply, any provision agreed to in the prenuptial against good morals or against the law will not be binding, and the distribution of assets is basically governed by the statutory system in the Code. A prenuptial agreement cannot effectively influence the statutory system and generally the statutory law on the division of marital assets continue to apply in a contested divorce.

Should prenuptial agreements be entered into under non-Thai foreign law?

If, under the law of the country of which one of the parties resides or is a citizen, the entering into of binding prenuptial agreements is permitted on terms more flexible than permitted under Thai law consideration should be given to entering into such an agreement under the law of that country. It may be possible to specify in that agreement that the law of that country is the agreed forum in the event of a breakdown of the relationship. For example, under the Australian Family Act binding financial agreements can be entered into between not only by couples who intend to marry but also between couples who intend to only live together in a de facto relationship. Often one partner will want to quarantine his or her existing assets for the benefit of children of a previous marriage or relationship. It is important to obtain expert legal advice as to both Thai law and the law of the foreigner’s country of residence before entering into a prenuptial or domestic relationship agreement.

Top 10 tips to follow in entering into a Thai prenuptial agreement

1. Obtain specialist legal advice as to Thai law and the law in the foreigner’s own country

2. Undertake any appropriate preliminary planning steps such as estate planning and ensuring that, if possible, separate property is not converted to common property during marriage.

3. After determining the proposed course of action and having considered jurisdiction, forum and conflict of laws issues make sure all formal requirements in either or both jurisdictions are complied with (for Thai agreements see Sections 1465 and 1466 of the Code).

4. Have the agreement prepared in both languages and ensure that both parties receive independent legal advice.

5. Prenuptial agreements should provide full and frank disclosure of each party’s assets and financial resources.

6. A prenuptial agreement must clearly identify and define each party’s personal or separate property.

7. Any Thai prenuptial agreement must clearly stipulate the basis of management of common property during marriage.

8. A prenuptial agreement must clearly stipulate the basis of division of marital assets on a breakdown of marriage subject to the prohibitions placed on this under Thai law and, possibly, on death taking into account the limitations imposed under Thai law.

9. Each party should review their wills both in Thailand and elsewhere regularly as appropriate.

10. It is important to adhere strictly to any financial management regime required or contemplated by the agreement.

Lanna Lawyers can provide advice as to the relevant Thai law and also as to the relevant law in many other countries through our in-house counsel or by referral to other appropriately qualified lawyers whom we deal with regularly.

Lanna Lawyers

Company Limited

99/107 Soi 10 Laddarom Elegance Payap (Q House)

Middle Ring Road

T. San Klang A. San Kamphaeng Chiang Mai 50130 Thailand

Phone: +66(0)849047797