contracts are not only hot topics at the cocktail parties of the rich
and famous, they’re also useful, binding, and becoming increasingly
popular for Canadians. Let’s look at a recent case, which clearly
demonstrates the potential significance of a marriage contract. My
client — I’ll call her “Mary” — a middle-aged woman, had finally come
to the realization that her marriage of 10 years was over. During a
disastrous second honeymoon, the uneasy feelings she had been
experiencing for the last five years had finally been confirmed.
she sat before me, with the financial guts of her marriage covering my
desk. Actually, she had reason to be proud. Mary had worked hard, she
had accumulated significant assets, including a nest egg from an
inheritance. There was a home, a cottage, an investment portfolio, and
quite a few other valuable items of personal property.
husband, on the other hand, had not been a saver. He had worked and he
had spent — and then he had retired. While he, too, had some retirement
savings, his nest egg was certainly smaller than hers.
we picked through the documents, receipts, and financial statements, I
tried to think how to best break the news that things did not look
promising. Mary’s nest egg, which had been acquired during the course of
the marriage, was probably going to be shared with her husband if they
separated and divorced. There was no doubt, even on the basis of a
preliminary calculation, that she was going to be writing her
“soon-to-be- ex”a cheque for hundreds of thousands of dollars.
I prepared to break the news, Mary pulled one last document out of her
portfolio like the proverbial rabbit out of a magician’s hat. “I’m not
sure if this is of any importance,”she said, passing a well-folded,
15-page document across the desk. “What’s this?”I asked. “It looks like
it hasn’t been opened since it was signed.”I unfolded the crisp papers.
is the marriage contract we signed two weeks before we got married. My
husband says it’s not binding because things have changed so much,”came
her reply. The tone of her voice suggested she had accepted his
pronouncement at face value.
a few moments of reading the contract, it became clear that Mary, with
the assistance of a good lawyer, had signed a marriage contract that
would save her more than $300,000 in her impending separation and
1. “MARRIAGE CONTRACTS ARE ONLY FOR THE RICH AND FAMOUS.”
don’t think Mary would have considered herself rich or famous. Ten
years ago, she was a woman about to marry for the first time. Her
intended partner, though, had been married twice before. Her friends had
not been entirely supportive of the union. One, in particular, urged
her to speak with a lawyer about a marriage contract that would protect
the assets she brought into this marriage.
media often sensationalizes the stories of wealthy divorce. Certainly,
many people want the inside scoop on the marriage contracts of people
like Donald Trump, Ted Turner, and Madonna. The fact remains, though,
that thousands of average Canadians sign marriage contracts and
cohabitation agreements every year. The reasons for signing a contract
usually have little to do with being rich or famous.
marriage contract is an agreement signed before or after a wedding that
provides a private and custom-made set of rules for dividing the
couple’s property should they separate and divorce or die. In fact, a
marriage contract can overlap in many of its functions with a Will. A
cohabitation agreement is essentially the same thing as a marriage
contract, but it’s designed for people who intend to live together — or
who are already living together — who wish to set out some rules to
govern any separation that they may experience. Marriage contracts and
cohabitation agreements can also establish some rules and regulations
for how the couple manage their day-to-day marriage, not just their
appreciate the function of a marriage contract, one must appreciate the
consequences of marriage itself. In every province or state, the laws
provide for a pooling of assets at the moment of marriage. The language
of these laws varies a little from province to province, but the general
result is the same: marriage creates an economic partnership, the
fruits of which will be divided between the husband and the wife should
they decide to separate and divorce. That general rule applies unless
the couple agrees otherwise in a marriage contract. Provisions with
respect to custody and access to children are another matter, but the
marriage contract allows couples to opt out of the provincial law with
respect to property.
while the myth may be that these contracts are for the rich and famous,
the reality is that any couple — whether going into their first,
second, or third marriage — could benefit from a marriage contract. The
same holds true for common-law couples.
2. “MARRIAGE CONTRACTS AREN’T BINDING.”
could be further from the truth. A marriage contract, if drafted and
signed properly, is as binding as any other legal contract.
In order to have a properly drafted and executed agreement, you must follow four simple rules:
the agreement must be in writing;
it must be signed by both parties;
the signatures must be witnessed;
there must be full disclosure and honesty in the negotiations leading up to signing of the contract.
is no legal requirement that the parties obtain independent legal
advice prior to signing the agreement, but it’s certainly highly
recommended. The fact that someone received independent legal advice is
one of the key elements that reinforce the “bindingness”of the
agreement. I encourage my clients to obtain independent legal advice on
marriage contracts in order to avoid problems down the road, such as one
party claiming: “I didn’t know what I was signing,” “I never had a
chance to talk with a lawyer,” or “If I’d known I was giving up my
property rights, I would have never signed it.”
terms of financial disclosure, marriage contracts include a provision
stating that each of the parties has made full financial disclosure to
the other of all their debts, obligations, and assets. This, too, allows
both parties to say that they went into the marriage and the contract
with their eyes wide open.
the myth may suggest that marriage contracts are not enforceable or
binding, the reality is these documents, when properly prepared, are as
binding as a lease, a mortgage, or an agreement to buy a house.
3. “MARRIAGE CONTRACTS ARE ONLY FOR PEOPLE WHO ARE ABOUT TO GET MARRIED.”
term “prenup”or “prenuptial agreement” is often used in place of
“marriage contract.”Every prenuptial agreement is a marriage contract,
but not every marriage contract is a prenuptial agreement. Prenuptial
means literally that it was signed before the marriage. After the
marriage takes place, it is still possible for the couple to sign a
marriage contract. Granted, there might be a little less leverage in the
negotiations, but many contracts are still signed after marriage.
remains a great deal of misunderstanding about the rights and
responsibilities of common-law couples. There are no statutory property
rights for common-law couples regardless of how long they have
cohabited. If a couple live together for 10 or 15 or even 20 years,
there is no law that states their property must be divided as if they
were married. In fact, it is quite the contrary. There is a presumption
that each person keeps the property that is in his or her name and
property that was acquired jointly is divided in accordance with
contributions to its acquisition. For precisely this reason, there can
be quite a bit of confusion and acrimony when a common-law relationship
breaks down. Division of property can become a “free-for-all,”with long
and expensive arguments. For this reason, common-law couples should sign
cohabitation agreements setting out their understandings about property
that is acquired, and which would need to be dealt with should the
the reality is that marriage contracts can be, and often need to be,
signed long after the marriage has taken place — and they are also
available for common-law couples.
4. “LAWYERS ARE TOO EXPENSIVE. LET’S SAVE ON COSTS BY SKIPPING THE LAWYER, OR BY USING THE SAME ONE.”
no legal requirement that a couple must hire a lawyer to create a
marriage contract. However, if they want to ensure that it’s binding
when it counts most, a lawyer’s advice can make the contract
bulletproof. And investing in quality legal advice now can pay huge
dividends at a later date.
natural to assume that one lawyer can do the agreement for both
parties, and it’s also natural to want to keep the legal fees at an
absolute minimum. However, one lawyer should not act for two people,
since there’s an inherent conflict of interest in advising them about
best way to keep costs under control is for the couple to do as much
work as possible in advance of seeing the lawyers. If you can assemble
this information in advance, you’ll be making very efficient use of your
lawyer’s time, which will help keep costs under control.
the two of you have done your homework, one of your lawyers can take
the lead in drafting an agreement that captures the consensus of the
couple. Once the agreement is drafted, the other spouse can then take it
to his/her own lawyer for independent legal advice to see if it
achieves the goals he/she had in mind.
while the myth is that lawyers should be avoided, the reality is that
their advice can be what makes this contract enforceable.
5. “THESE AGREEMENTS ASSUME THAT WE WILL SEPARATE. THEY’RE A TURN-OFF — EVEN DISCUSSING THEM SPOILS THE ROMANCE.”
Like millions of other people, I was a big fan of Seinfeld
and the crazy situations that Jerry, George, Elaine, and Kramer got
themselves into over the years. One of my favorite episodes is the one
in which Kramer convinces George that a sure-fire way to break off his
engagement to Susan is, in a word, “Prenup!”George rushes off to their
apartment and announces to Susan that he wants a prenuptial agreement.
Her reaction? She bursts out laughing. “Prenup?”she says. “You haven’t
got anything!”She walks away, still laughing, and agrees to sign
whatever he wants. George just sits there, wondering what the heck
happened to his smart plan.
this important conversation is not handled properly, it can spoil the
romance and provoke a bitter argument. You must know what you’re talking
about before you even begin. Put yourself in your partner’s shoes:
imagine that you’re sitting with a coffee and a newspaper when all of a
sudden your fiance says, “You know, I think I want you to sign a
marriage contract.”What would flash through your mind?
be sensitive, tactful, and leave yourselves plenty of time to discuss
the purpose of the agreement. Pick a comfortable place and time when you
won’t be interrupted to have your discussions. Also, be aware of what’s
going on in your partner’s life; try to choose a time when he or she
isn’t under the gun (personally or professionally), preferably several
months before the wedding. I know of one case in which the bride was
under terrible pressure to prepare for a presentation at an out-of-town
conference and her mother was very ill with cancer. Her fiance asked her
to sit down to review some of the key components of a marriage
contract. She took one look at it and burst into tears. Her parents, she
said, had been married for 45 years without a contract. Why did they
a good marriage contract or cohabitation agreement can actually make
both spouses feel more comfortable and secure in their relationship,
which allows them to better enjoy the marriage or cohabitation. Look at
these agreements as a possible way of strengthening the relationship
rather than a way of undermining the romance. There are lots of
documents that couples need to review: Wills, powers of attorney,
agreements of purchase and sale and, in some cases, marriage contracts.
6. “WE HAVEN’T GOT ANYTHING, SO WE DON’T NEED A MARRIAGE CONTRACT.”
easy for a couple to conclude in the early stages of their lives
together that a marriage contract wouldn’t be of any assistance. They
may not have many issues today, but that doesn’t mean they shouldn’t
think about the possibilities. It never hurts for a couple to sit down
and do some financial projections about their expectations in the
relationship. Where do they think their careers are going to lead? Where
do they imagine they’ll be living in 10 years? What are their plans
with respect to children? Whose career will be interrupted in order to
care for the children? How will that person be protected?
whether you have property or not, marriage creates rights and
obligations for the lifetime of the union. Common-law cohabitation may
not create property rights, but it does create the right of a person to
claim spousal support after living together for the requisite number of
years (this number changes from province to province).
of your age, station in life, or other considerations, it never hurts
to think about the advantages and disadvantages of these agreements for
7. “THESE AGREEMENTS DON’T APPLY TO SAME-SEX COUPLES.”
so: same-sex couples do sign cohabitation agreements. As a result of a
recent Supreme Court of Canada decision, same-sex couples are entitled
to be treated the same way under our provincial family laws that
common-law couples are treated. All the same rules that apply to
common-law spouses now apply to same-sex couples in Canada.
8. “A MARRIAGE CONTRACT WOULD BE A GOOD WAY TO LOCK UP CUSTODY OF THE KIDS IF WE SHOULD EVER SEPARATE.”
family laws specifically provide that marriage contracts and
cohabitation agreements may not include provisions that attempt to
govern custody and access of children in the event of separation and
divorce. It’s impossible for a couple to anticipate the best interests
and needs of their children (who may not even be born yet) at the time
they sign a marriage contract.
law reserves to the court the right to throw any such provisions out
and make orders based on what is in the best interests of the children
at the time of the actual separation or divorce. The same is true for
cohabitation agreements that attempt to predetermine custody and access.
doesn’t mean that these agreements can’t contain provisions that affect
children. In second or subsequent marriages, children sometimes come as
part of the “package deal.”It’s quite acceptable to set out some rules
and regulations or understanding about how the families will be blended.
In one agreement, for example, a mother with children from a previous
relationship wished to have a provision confirming the family’s
intention that the children would continue to be educated in the
Catholic school system. This was important enough to her to have it
confirmed in a contract.
this example illustrates, marriage contracts and cohabitation
agreements can provide couples with an opportunity to set out their
understanding about the moral, educational, and religious upbringing of
9. “THE COHABITATION AGREEMENT WE SIGNED WHILE LIVING COMMON-LAW WILL BE WIPED OUT IF WE GET MARRIED.”
Dead wrong. A cohabitation agreement is automatically converted into a binding marriage contract if the couple gets married.
is a good time to point out another shocker that many couples discover
much too late: marriage revokes your Will. It’s hard enough getting most
people to sit down and actually make a Will: it would be a shame to see
all of that work and the fees spent on lawyers wasted simply because
someone didn’t realize the consequences of their marriage. Make a note,
if you’re planning to get married, to review your Will and make sure it
continues after the marriage. If you haven’t yet made a Will, do so now.
(For more on the topic of Wills, see “Life After Divorce”
10. “WE DON’T NEED TO THINK ABOUT THESE THINGS. WE HAVE A ‘MAGIC FORMULA’ THAT WILL KEEP US MARRIED FOR EVER.”
relationships have very little to do with magic formulas. Certainly
there are some couples (and I count my wife and I among them) who seem
to be blessed in the way that they discover each other and continue in
their relationship, but the fact remains that good relationships are
based on some pretty concrete foundations.
my view, there are three layers to a good relationship. Layer one, the
foundation, is based on mature love. Mature love is comprised of at
least 10 things: honesty, patience, the ability to take the long view,
respect, balance in one’s life, tolerance and forgiveness, room for
growth, a sense of humor, loving gestures, and good old-fashioned elbow
grease in working at a relationship.
must add to that foundation a second layer of realistic expectations.
Couples need to know that there will be challenges to their
relationship. Typically, they come in the categories of money, children,
relatives, careers, illness, and, unfortunately, the arrival of new
people on the scene. Couples need to have realistic expectations in a
marriage. This doesn’t mean that you have to be cynical or jaded about
people and life, but it does mean that you are aware that anything can
but not least, is the couple’s ability to solve problems when they
arise. Good problem-solvers have the ability to identify what the real
problem is, determine exactly how it arose, then work together to solve
it. Here are some tips regarding problem solving:
What are the facts of which both of you are absolutely certain?
What time lines do you face in trying to solve the particular problem?
are some of the alternatives you can use to solve the problem, and what
are the advantages and disadvantages of each approach?
Have you both applied your minds to the problem and the alternatives?
Do you both agree on the same approach to solving it?
And finally, are you committed to implementing the solution that you’ve chosen together?
that both of you are on the same wave-length, you must commit
yourselves to working on a problem together. I highly recommend the use
of marriage courses that teach good problem-solving skills to couples
who already have a mature love and realistic expectations; these skills
will serve them throughout a long and happy marriage or common-law
Mediators and marriage contracts
of you should retain your own lawyer to advise you before you sign the
contract. However, you might want to use the services of a mediator in
the negotiation and discussion phase of the contents of an agreement.
mediator is a neutral third party who works with the couple to reach a
consensus on the contents of the agreement. The lawyers stay in the
background to make sure that adequate disclosure is given and to ensure
that their clients understand the actual contents and nature of the
agreement. The mediator leads the couple through a series of questions
and answers in an effort to reach a friendly consensus about
strengthening the marriage or the relationship through the agreement.
my experience, mediation is a safe and friendly way for a couple to
have this discussion. Even though it means the involvement of another
professional, it can actually reduce costs — and stress. Mediators are
also much more likely to keep the discussion on track than some tough,
you feel intimidated about the prospect of having this kind of
discussion with your partner, a mediator (with the lawyers in the
background) may be just the ticket.
we’ve seen, there are many myths about marriage contracts and
cohabitation agreements. The good news is that the average person who is
prepared to take a few hours to devote to a little research and engage
in some conversation with his or her spouse is quite capable of
understanding this whole area of law. Marriage contracts and
cohabitation agreements are not rocket science. They are simple but
binding agreements that allow couples to set out a private set of rules
that will govern their marriage and relationship.
This article has been edited and excerpted from Surviving Your Divorce: A Guide to Canadian Family Law by Michael G. Cochrane.