Attitudes appear to be shifting towards family law contracts, such as cohabitation agreements and marriage contracts, driven largely by Millennials and other younger Canadians who are increasingly open to the idea of thrashing out their expectations regarding property division with their partner ahead of time, just in case they split in the future.
But don’t leave your prenup to the last minute. Whatever their age, couples will find that the earlier they start the conversation about a family law contract, the more they will get out of these under-rated legal instruments, which typically cover the treatment of property brought into the relationship by each of the parties — assets like the family home, pensions, interest in a family business or personal possessions.
Family law contracts can also be used to set out the parties’ intentions regarding potential spousal support. However, judges generally have more leeway to step in and alter the terms of agreements on this subject, which are much more susceptible to changes following unanticipated developments — especially if one party has waived their rights altogether.
Prenups on the rise
Research by an American polling firm suggests that prenups are entering the mainstream south of the border, with half of U.S. adults expressing support for their use. Still, that positive attitude hasn’t entirely translated into action since the same survey found that only around 20 per cent of married couples had followed through and signed a prenup.
But it’s a different story among younger generations, where 41 per cent of Gen Xers and 47 per cent of Millennials who have been married or engaged have personal experience executing a prenup.
Getting a sense of the Canadian landscape is trickier since family lawyers don’t tend to use the term “prenup” and because of a lack of empirical data.
However, the Globe and Mail has reported on a similar trend several times. In one story, the newspaper quoted a financial advisor who said she had noticed professional millennial couples were less likely to let emotions interfere with their decisions around marriage contracts and cohabitation agreements, treating them instead “like a business deal to help preserve their net worth.”
I’ve written before about the value of family law contracts for couples of all ages. And my own experience with young couples suggests the message is getting through, so I’m pleased to see them taking such a mature approach to their family law rights.
Timing is everything
Wedding preparations are notoriously hectic affairs for engaged couples, but I would advise them to put their marriage contract negotiations at the top of the checklist to complete before their big day.
Particularly in cases where the parties are financially unbalanced, you need a long lead time to ensure that there’s time to freely negotiate all the issues at play.
The closer you get to the wedding date, the more likely one spouse will feel pressured to sign. It’s not unusual to see parties attempt to row back on their agreements after a split, claiming that they were executed under duress, with the threat of the wedding’s cancellation hanging over them unless they agreed.
The considerations are slightly different for couples entering cohabitation agreements, since these are typically signed between common-law spouses seeking to clarify their property rights in the event of a split, because of their inability to rely on the property division provisions of the Family Law Act.
However, the time crunch can be just as troublesome for negotiations, particularly when the couple is pooling their funds to purchase a property together — one of the most common triggering events for entry into a cohabitation agreement. Instead of the wedding day, the looming date on the party calendar is the day the real estate deal is scheduled to close.
The value of these kinds of contracts is in the certainty they provide to everyone involved regarding the distribution of their combined property, so you don’t want the drafting process to undermine its enforceability.
Starting the process early also allows both sides to provide each other with full and frank financial disclosure and seek independent legal advice before signing the agreement. This minimizes the chances that a court will step in to later set aside a contract judged unconscionable.
If you’re thinking of getting a family law contract or want to discuss the subject further, feel free to contact our office.