December 24th, 2020
“Will you marry me?” “Yes!!! But first please sign this Prenuptial Agreement”
Even though there is nothing romantic or sexy about prenuptial agreements there are advantages for having one. This type of agreement is often unfairly characterized as being inconsistent with a loving relationship. This is simply not the case. On the contrary, most couples will benefit from having an early discussion about expectations in their relationship. The exercise of negotiating a prenuptial agreement can often illuminate what may be future areas of disagreement and give the parties a chance for an early remedy.
Simply stated a prenuptial agreement is a contract. It is negotiated and signed before a couple marries. A prenuptial agreement provides for the resolution of issues of support and the division of property owned by one party or both of them upon relationship breakdown. It can also be used to clarify the obligations and entitlements of the parties in their dealings within the household, business and property.
There must be plenty of time for disclosure, contemplation and negotiation prior to signing a prenuptial agreement. As such, it is always a good idea to have a great deal of runway before the wedding day. It serves no purpose to “force” an agreement on the eve of nuptials. A hastily signed agreement just before the ceremony is a recipe for challenges on the basis of duress and unconscionability. Both parties must have ample opportunity to consider their position, seek legal advice and ponder future events. Procrastination or putting off signing of the agreement only tends to weaken it.
Each party must come to the signing table equipped with financial knowledge, knowledge of the law and be emotionally ready to come to terms with the agreement. Preparation includes having adequate information about each other’s property and income (disclosure). If one or party does not have information about the other’s property and income at the time of signing, the agreement might be challenged for a lack of disclosure. Also, it is more likely that a challenge to the pre-nuptial agreement will develop If one or both parties did not have adequate legal counselling to understand the full import of the agreement. It goes without saying that if a party is simply not emotionally ready to address the difficult subject matter of a prenuptial agreement, they will not be happy signing one. Preparing for signing such an agreement takes time. It is imprudent to leave the signing as a last detail before the wedding. It should be the first.
The parties should have had ample time (without the added stress of having already made a big investment of time, money and energy on wedding arrangements) to consider all aspects of the agreement.
Agreements signed on the cusp of marriage are more vulnerable to attack. It is more difficult to challenge the validity of an agreement if each of the parties had ample time to consider it, with independent legal advice and without the added stress of an impending wedding.
A prenuptial agreement:
1. Will encourage and stimulate the examination of financial issues and considerations that are important to each of the parties prior to committing to a long-term relationship.
2. Will help clarify financial expectations, entitlements and obligations throughout the term of the relationship.
3. Will clarify responsibilities for contribution to and the management of the household and other property.
4. May help to preserve each party’s personal and business assets, property and money accumulated before the commencement of a long-term relationship.
5. May help preserve property acquired through a gift, inheritance or increase in value.
6. May help to avoid arguments over assets, debt, support and other finances in the event of relationship breakdown.
7. Will record each party’s perspective, mutual and agreed upon intentions in the event of the death of either party or a relationship breakdown.
8. May help to preserve a previously accumulated estate for children from prior marriages.
9. May be used to protect spouses from each other’s debts.
The over 50 set have often accumulated a great deal of wealth. They are also in their highest income earning years. Many parties that remarry wish to preserve a portion of their estate for children from their first marriage. They may also want to ensure that their new spouse is comfortable into retirement. A prenuptial agreement can specify an estate plan be put in place after the couple marries to secure the desired result. Assets of the deceased spouse may then be divided according to the estate plan between the surviving spouse and the deceased spouse’s children.
If you do not make an agreement, your property will be divided pursuant to provincial legislation with possible intervention by the Court. This is often not the result that parties desire.
Are you considering marriage or re-marriage? In Calgary, contact Anthony Young QC with Young Family Law to discuss whether a prenuptial agreement is right for you. Ensure your property is divided according to your wishes – and not left to Alberta provincial legislation and the Alberta courts. Call Anthony at 403-219-4216.
Anthony Young QC is a Calgary lawyer with extensive experience in prenuptial agreements. www.youngfamilylaw.ca