Separation of Property During Marriage
Generally, a prenuptial agreement concerning separation of property is executed prior to the solemnization of marriage.Its purpose is to ensure that no commingling of property occurs during the course of the marriage.But is it legally possible to enter into a separation of property agreement after marriage has taken place? What are its implications on inheritance rights?
What is a Separation of Property Agreement?
A separation of property agreement constitutes a type of marital agreement, namely a written covenant between husband and wife that governs the ownership and administration of property during the marriage, which deviates from the statutory default regime as provided under Article 139 of the Indonesian Civil Code (“KUHPerdata”).
By law, a community property regime is presumed to arise upon the solemnization of a marriage, pursuant to Article 119 of the Civil Code, unless stipulated otherwise in a valid agreement. Under such legal framework, marital assets are divided into two categories: community property and separate property. Community property consists of assets acquired during the marriage. Separate property refers to assets owned and controlled individually by either spouse, as long as not otherwise agreed (vide Article 35 of Law No. 1 of 1974 on “Marriage Law”).
Assets acquired during the marriage may be excluded from the community property regime through a marital agreement. A marital agreement is a written agreement executed by spouses, legalized by the marriage registrar, and may provide for full separation of assets during the marriage. Specifically, a separation of property agreement governs the ownership and management of each party’s assets, both pre-marital and those acquired during the marriage, and must be executed in notarial deed form as required under Article 147 of the Civil Code.
Separation of Property Agreement During the Course of Marriage
Prior to the issuance of Constitutional Court Decision No. 69/PUU-XIII/2015, dated October 27, 2016 (“Constitutional Court Decision”), a marital agreement could only be executed at the time of or prior to the solemnization of marriage. The Constitutional Court Decision amended Article 29 paragraph (1) of Law No. 1 of 1974 on Marriage, thereby allowing a separation of property agreement to be executed not only before or at the time of marriage, but also during the subsistence of the marital relationship.
Marital agreements are governed by Article 29(1) of the Marriage Law, as amended by Constitutional Court Decision No. 69/PUU-XIII/2015 (“Decision 69/2015”), which reads as follows:
“At the time of, prior to, or during the subsistence of a marriage, both parties, by mutual consent, may enter into a written agreement, which must be authenticated by a marriage registrar or a notary public, and the contents of such agreement shall also be binding upon third parties insofar as they are affected thereby.”
Even though such an agreement may be entered into after the marriage has commenced, its content must remain consistent with statutory law, religious doctrine, and public morality, in accordance with Article 29(2) of the Marriage Law. To be legally valid, a marital agreement must satisfy the following conditions:
- Mutual consent of both parties (husband and wife);
- Authentication by a marriage registrar or a notary public;
- The agreement must not contravene the limits of statutory law, religious principles, or accepted standards of morality.
Legal Consequences on Inheritance Rights
Article 141 of the Civil Code states:
“Prospective spouses, by entering into a marriage agreement, shall not renounce the rights granted to them by law over the inheritance of their descendants, nor shall they stipulate any arrangements concerning such inheritance.”
Thus, a separation of property agreement between spouses does not eliminate their inheritance rights, as long as the surviving spouse continues to qualify as a lawful heir. However, if a separation of property agreement is in effect, upon the death of one spouse, no division of community property will occur (vide Article 128 of the Civil Code), as the law presumes no joint property exists. Therefore, only the individual estate of the deceased is subject to inheritance, and it shall be distributed to the heirs in accordance with the applicable legal provisions.
According to the Compilation of Islamic Law (“KHI”), a separation of property agreement does not revoke inheritance rights between husband and wife, as long as there is no legal disqualification. As stipulated in Article 173 KHI, a widower or widow retains status as an heir (Article 174(b) KHI). When a separation of property agreement exists, only the individual assets of the deceased spouse are inherited, as there is no marital property to be divided. Furthermore, the net estate is determined after deducting expenses for medical care, burial, debts, and bequests to relatives, as set out in Article 171 KHI.
Conclusion
A separation of property agreement is a type of marital agreement in which spouses consent in writing to regulate the ownership and administration of their respective assets. Following Constitutional Court Decision No. 69/PUU-XIII/2015, such an agreement may be made either prior to or during the course of marriage, provided it fulfills all legal formalities. The separation of property does not extinguish inheritance rights between spouses, either under the Civil Code or under Islamic Law. The surviving spouse remains legally entitled to inherit from the deceased spouse’s separate estate, unless disqualified by law. The distribution of the estate must follow the prevailing inheritance law.
Legal Basis
Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata)
Compilation of Islamic Law (Kompilasi Hukum Islam)
Law No. 1 of 1974 on Marriage
Constitutional Court Decision No. 69/PUU-XIII/2015
Authors:
Yohana Maranatha, S.H.
Eva Rutnauli Sinaga
Editor:
Muhammad Arief Ramadhan, S.H.