Important Considerations for Your Prenuptial Agreement
Today, many couples consider a prenuptial agreement, whether for a first, second or later marriage. Below are some things you may want to consider if you are getting married or are considering a prenuptial agreement.
What is a Prenuptial Agreement?
A prenuptial agreement, sometimes referred to as a cohabitation agreement, is a legal agreement that both parties enter into prior to a marriage. The purpose of prenuptial agreements is to sort out tricky issues around assets, debts, and estates in the event that the relationship breaks down. Prenuptials can seem like a very negative thing, but they should be thought of as a type of insurance. In the unfortunate event that your marriage doesn’t work out, you can make sure that issues concerning money and debts are resolved as set out in the agreement.
What Issues are not included in a Prenuptial Agreement?
A prenuptial agreement cannot create a future agreement about children or custody arrangements once a relationship breaks down. Child custody must be dealt with in a manner which considers the best interests of the child at the time the issue is considered after separation.
A prenuptial agreement also cannot be completely one-sided. Canadian law tries to make sure that following a separation or divorce, the parties remain at a similar economic standard that they enjoyed while married. This means that an unfair prenuptial agreement can later be set aside by a judge if it is inconsistent with the Family Law Act or Divorce Act. You can work with a family lawyer to draft an enforceable prenuptial agreement. This can reduce the likelihood of the agreement being set aside after the separation occurs.
How Do I Make Sure My Prenuptial Agreement is Enforceable?
In BC, a variety of elements can affect the enforceability of a prenuptial agreement. Below are a few factors that must be considered when drafting your prenuptial agreement:
1. Full Financial Disclosure
When drafting your prenup, you should disclose all of your income, assets, debts and liabilities and provide particulars of their values. Failure to disclose could affect the validity of your prenuptial agreement. In S.L.D. v. W.A.D., 2016 BCSC 616 (CanLII), the prenuptial agreement was challenged by the wife on the basis of a failure to disclose financial values of corporate holdings. The issue concerned whether she had a full understanding of the value of corporate holdings. The wife said she did not obtain proper legal advice. The existence of these holdings was revealed prior to the signing of the agreement, but they were not given a specific or approximate value. The prenuptial agreement was ultimately found to be valid. However a thorough investigation to value the corporate holdings would have avoided the costly legal challenge and the poor outcome for the wife who disputed the agreement.
2. Compliance with the Relevant Statutes
All prenuptial agreements must be consistent with the Family Law Act and the Divorce Act. If you are unfamiliar with the requirements of these laws, you should consider working with Valerie to determine how you can best to meet these legal provisions.
3. Sufficient Time to Consider the Proposal
Prenuptial agreements should be negotiated and signed well in advance of the wedding. This gives each party time to obtain legal counsel, provide disclosure, review the documents, and review the agreement with the benefit of legal advice.
4. Avoiding Undue Influence and Duress
Prenuptial agreements, like other legal agreements, cannot be signed under undue influence, coercion or duress. This means that each party must freely and willingly enter the agreement without being subject to emotional pressure or threats.
5. Independent legal advice
It is important tp obtain independent legal advice when considering a prenuptial agreement. This means you must obtain your own lawyer. Your fiance’s lawyer is not acting for you. Consider Steernberg v. Steernberg, 2006 BCSC 1672 (CanLII), where a prenuptial agreement was signed on the day of the wedding without independent legal advice for either party. Mr. Steernberg was bringing $1.7 million into marriage (though his fiance did not know this) and his fiance was a recently discharged bankrupt. The prenuptial agreement had portions which referred to the execution of Mr. Steernberg’s Will, where Ms. Steernberg was to receive 1% of Mr. Steernberg’s estate for each year they lived together. However, Ms. Steernberg had no idea what 1% of Mr. Steernberg’s assets were at the time.
To complicate things further, at the time of Mr. Steernberg’s death, Mr. Steernberg had made a later Will which was not quite consistent with the prenuptial agreement terms and gave Ms. Steernberg less than agreed amount. Ms. Steernberg was forced to take the issue of the prenuptial agreement to court for enforcement.
Starting the Conversation about a Prenuptial Agreement
Starting a conversation about a prenuptial agreement can be intimidating and uncomfortable. Many people are afraid that asking for a prenuptial agreement will doom their relationship. You may wish to raise issues concerning your own family history, whether you have been married before, the emotional and financial cost associated with sorting out family law issues in court. Consider thinking about a prenuptial agreement as insurance. You may never need to use it, but you will have more peace of mind knowing that you have it in place.
Talk to Valerie M. Little About a Prenuptial Agreement
Valerie M. Little is located in New Westminster, B.C. She has over 25 years of experience handling a variety of family law issues, including preparing legal agreements for her clients unique needs. Valerie can give you advice about a prenuptial agreement. She can draft a prenuptial agreement for you. She can review a prenuptial agreement which your fiance’s lawyer has prepared. And she can contest a prenuptial agreement where there are valid grounds. Find out more about legal agreements by calling Valerie in New Westminster today at 604-526-3333.