Globe and Mail

For Richer or Poorer: Putting it in writing

It may not sound like the world's most romantic idea, but there's good reasons for love birds to consider a prenuptial agreement. Here's a primer on the advantages of getting it in writing before the big day.

Special to The Globe and Mail
Saturday, October 14, 2000

While no one ever gets married with the intention of getting a divorce, each year thousands of couples in Canada call it quits. Most people would prefer an amiable separation, but anger and disappointment being what they are, this rarely happens. And while less than 4 per cent of divorces are finalized by a contested hearing, the squabbling and confrontations of an out-of-court settlement are no less messy.

Suppose there was a way to clarify how the money would be divvied up before the hissing starts?

Well, there is. You can sign a co-habitation agreement or marriage contract to make it perfectly clear how your stuff will be divided if you and your partner go your separate ways.

(While these are sometimes referred to as prenuptial agreements, this isn't the terminology used in Canadian legislation).

A co-habitation agreement is a contract that is entered into by two individuals who are living together but not married. Because co-habitating couples have less rights legally -- for example, current legislation doesn't allow for spitting of assets -- the range of what can be negotiated in this type of agreement is narrow.

Often in a co-hab agreement, the partners seek to set down spousal supportobligations with less focus on the division of property front, unless they plan to marry at some point.

A marriage contract, on the other hand, is an agreement between two people who plan to get married or who are married. It tends to focus on organizing financial affairs in a way that is different than they would be organized if spouses were to separate under current family law (which differs from province to province in Canada).

Covering your assets: The No. 1 reason people sign on the dotted line is to protect themselves, or more specifically, their assets. While it would be nice to think that custody or access issues could be settled before the acrimony of divorce leaves a sour taste in parents' mouths, these areas are beyond the purview of co-habitation agreements or marriage contracts. Nor are these contracts allowed to specify that should your relationship break down, you will boot your ex out of the matrimonial home. With a matrimonial home -- defined as "property ordinarily occupied as a family residence at the time of separation" -- both partners have special rights of possession.

However, as far as the assets go, you can set down how they will be divided in the event of a split.

Let's say you're bringing significant liquid assets into a relationship.

While under most provincial divorce rules, income on that pool of money would be divisible, you might not like the idea of that one little bit. After all, why should your ex share in the increase in the value of an asset he or she did not contribute to in any way?

These assets could include divorce settlements, insurance benefits and inheritances. And this is the usual reason contracts are entered into -- to exclude specific assets from being equalized.

Second time around: Of particular interest to people who are entering into second marriages and have children by a previous marriage, a marriage contract organizes the individuals' finances so that everybody knows what's happening.

This can be particularly important if one of the parties is currently receiving spousal support. Let's face it, if you're receiving a very comfortable level of spousal support from husband No. 1, and you're contemplating hitching up with husband No. 2, you're taking a big risk financially. Should the new relationship not work out, you will have given up the income stream from your first ex-husband -- an income stream that may not be replaced by your second ex.

Then there are the people who are widowed.

"I've been involved in a marriage contract recently where people in their late 30s, early 40s are marrying with young children, both of them were widowed," says Cheryl Goldhart, family law department head of Gowling Strathy & Henderson in Toronto. Because each had come into a great deal of money, they both felt the need to protect those assets for their children.

Even young, first-time marrieds may have need of a contract. Or so their parents think. Having watched many of their friends, or children of their friends, go through divorces, parents want to make sure that the family money isn't at issue and that their children's future inheritances and assets are well protected.

The biggest need for a co-hab agreement or marriage contract is usually if one partner has significantly more assets than the other, or if there are children on one side and not on the other. Then the partner with the most may want to protect assets accumulated prior to the relationship. Or a parent may want to ensure that assets meant for their children stay with them.

Plan ahead: If you think you're a candidate for a marriage contract, don't try springing the idea on your soon-to-be partner at the 11th hour. If you know you are getting married on June 18, May 1 is not the time to introduce the topic.

You need to put the discussions and the contract into place well before the date you do the deed. According to Ms. Goldhart, "the closer to the wedding, the less the contract is going to be valid at the end of the day."

Before you bring it up, be clear on why you want a contract. Is it your idea or your family's? And be truthful with your partner.

Whether you want to make sure your children from a first marriage are protected, or you want to protect your new partner from the barbs of family members who see him or her as a fortune seeker, explain your reasons. There's nothing wrong with saying, "I ran my business for 10 years without any interference or ownership by others. I want to keep that autonomy."

Getting a potential spouse or partner to sign one of these documents is no walk in the park. Many a bride or groom has been left holding the moneybag while an irate buddy headed off in a huff.

It takes the highest level of trust and a good understanding of both parties' interests for a marriage contract to happen. Ms. Goldhart has seen marriage plans come to a grinding halt over the negotiation of a marriage contract.

"There's a lot of emotional stuff that goes on." she says. If one side is feeling mistrustful or suspects the other side is out to pull a fast one, the whole negotiation can collapse.

What if your spouse won't sign? That's perhaps the biggest benefit of the contract negotiation: You get things out in the open before it's too late.

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