The Value of a Prenup
A Prenuptial Agreement is a tool used to either correct a financial power imbalance prior to a pending marriage, or to perpetuate that power imbalance. The second choice is the most fundamental reason people seem to want these agreements.
A prenup is a Domestic Contract which is an agreement recognized by the Family Law Act of Ontario and governed by the statutory requisites of that legislation. The actual real name of a prenuptial agreement is a Marriage Contract.
Young people being married for the first time in a jurisdiction such as Ontario are not inclined to want a prenuptial agreement unless one of them comes from a wealthy family. In that case it is usually the parents of the bride or groom who are the driving force behind the agreement. Why do they not usually care. Because they generally have very little money, a small or non-existent asset base, more liabilities such as credit card debt than assets, and are optimistic about the future, their relationship and their soon to be spouse.
People who are entering second or third marriages (or fourth and fifth) are the largest group who seek these agreements. They want them for a set of reasons all their own. Usually one or both have acquired some wealth, they may have children from a previous marriage, they may have gone through an acrimonious divorce, and they are far more cynical than newlyweds about the prospect of staying together forever.
Many people call my office looking for marriage contracts. When it is the spouse that has little or nothing they usually adopt the attitude that they don’t want anything anyway from their spouse to be and are happy to sign just so they can get on with the wedding. It is of interest to me to have noticed that quite a number of people who call tell me that the wedding is just a week away, or that they are pregnant and need to get married as soon as possible, or that their fiance says no prenup – no wedding.
Aside from the legal implications of signing any contract, including a marriage contract, under duress, what should you consider before agreeing to be completely separate as to your property. That means that whatever you own on the day of your marriage is yours and whatever your spouse owns on that date is his or hers. It also means that any growth in those assets and the acquisition by either of you of any new or additional assets may well be excluded from net family property calculations on separation. It may also mean that the house you will occupy during your marriage will belong to your spouse and on separation you will have no claim to any part of the value of that property.
Do not take the implications of a marriage contract that creates fully separate property lightly. Think about what you envisage the future to be. Will you be a stay at home mother raising the children? Will you take a job at a salary far below your spouse’s salary? If the marriage breaks down ten or fifteen years down the road will you be content to be put out of the matrimonial home with no money to purchase a new place to live. Will you be happy receiving only spousal support and perhaps child support when your spouse has managed, during the course of your marriage, to acquire hundreds of thousands of dollars worth of assets while you encouraged him or her and cared for him or her and nurtured him or her. Not likely.
The idea of marriage is a romantic concept, and during the pre-marriage period people can be very idealistic about the future. Unfortunately, many marriages end in divorce. Keep in mind that if you find yourself in the middle of a divorce some time down the road, you will want to rely on your pre-nuptial contract. You may not be able to find a job, or a job that will provide you with the amenities you have enjoyed during the marriage, or you may be unemployable because you gave up your career to look after the home and/or the children.
If you have contracted away your right to share in the money or assets your spouse has acquired during the marriage, you will be sorry that you did not carefully consider the implications of what you were signing when the prenup was put in front of you.
The pressure to just sign and get it over with may be enormous. Do not sign any contract without good, sound legal advice. By that I mean find yourself an experienced family law lawyer and discuss with him or her your concerns about the future and your concerns about your financial well-being if your new marriage breaks apart when you are at an age and in circumstances that will make it difficult if not impossible to re-establish yourself financially.
Treat a marriage contract seriously. Your future may depend on it.
Steven M. Bookman is an experienced lawyer practicing Family Law in Toronto, Ontario. He may be reached at 416-488-2243 or at [email protected]. His offices are located at 1881 Yonge Street, Suite 504, Toronto, Ontario, M4S 3C4. Visit the firm’s web site at www.bookmanlaw.com.