Prenuptial Agreements

As June approaches, brides and grooms across the country prepare to tie the knot. And, increasingly, they have more on their minds than simply the mutual love and devotion that they feel for each other. Today, they come before the minister armed with matching wedding rings and a signed marriage contract or prenuptial agreement in hand.

These pacts have been around for many years, but only in the past fifteen years has their popularity soared. No longer are they just the domain of older couples with children and assets from a former marriage, but are commonplace with couples of all ages and economic stations in life.

The reason is simple: current legislation in most provinces allow both the husband and wife equal claims on the value of all assets accumulated during the marriage. Any appreciation of assets held before the couple walked down the aisle is also split down the middle. Consequently, upon marriage break-up, the value of everything brought into the marriage is subtracted from total family assets in calculating "who gets what" upon separation and divorce.

This may seem equitable on the surface but there is one glaring exception -the family home. For example, let’s say you go into a marriage owning a house in which you have equity of $100,000. Upon splitting up, the laws of most provinces automatically allow your former spouse a claim to fifty per cent of the property, provided it was used as the couple’s principal residence during the time that they were together.

However, if you go into the marriage with the same $100,000 sitting in the bank, and you buy the house the day after the wedding, you get credit for having brought $100,000 into the marriage and it need no longer be split 50/50 upon marriage breakdown.

Other reasons people sign on the dotted line of a prenuptial agreement include (a) business arrangements such as limited partnerships that may require a marriage contract to protect the firm; (b) older couples on their second marriage who have sizable assets that they want to protect for their children or other relatives; (c) well meaning parents or grandparents who insist that the couple have such an agreement so that inheritances and gifts can be transferred between generations without interference from a former spouse, and (d) marriages that take place between spouses who are several years apart in age.

These agreements are private contracts between the parties and do not have to be filed with a court. However, in order to be successfully implement highlights information containeded in the event of death or divorce, certain basics must be attended to prior to signing. These include:(a) both parties must have obtained independent legal counsel; (b) the document must contain full disclosure of each party’s assets and liabilities at the time of signing; and (c) none of the parties must have signed the agreement under duress (such as any last minute ultimatums just prior to the wedding ceremony).