Pre-Nups? A Nasty Surprise or a Healthy First Step?
- Before cohabitation, open a frank dialogue: If you earn different incomes and hold incomparable assets or expect a large inheritance or wealth transfer, schedule time to discuss economic expectations and opportunities with each other. Learn your legal rights and obligations before the moving date.
- Due diligence is a two sided issue: If you hold a greater share of the assets including the house you are both going to be residing in, and you seek to prohibit the sharing of any or a restricted interest in your wealth, fully disclose your financial circumstances now and for the foreseeable future. Identify the restricted asset(s) and liabilities for which you remain solely responsible. If you are the one with lesser value in holdings, ask enough open ended and specific questions to become fully informed.
- Discuss underlying expectations: Planning to stay home and raise a family? Wanting to wholly preserve your interest in an inherited cottage? Intending to maintain control over your business? Desiring to retire early to manage all the family’s properties?
- Legal advice is worth the price: Your lawyer will represent you in dealing with your partner’s counsel; guide you through the need for a contract, the benefits and any negative impact to you; and draft or co-author the agreement with your partner’s lawyer. Two partners require two independent lawyers familiar with negotiating and drafting domestic contracts.
- Scope of the terms: Ontario law provides the contract may include provisions relating to property ownership and division, spousal support obligations, and the right to direct the moral and educational training of their children but not the decision making or visiting of the children.
- It’s really a separation agreement: Whether this contract starts as a prenup agreement or a marriage contract initiated prior to or during marriage, its primary role is to arrange for the settling of affairs if the relationship fails.
- Collaborative approach, mediation, or traditional negotiation?
- Working through expectations, complete financial disclosure, and desired outcomes face to face in a non-threatening environment is a positive way to begin a new stage in your relationship.
- Using mediation is a three step path: meeting with your lawyer to learn about your rights and obligations, then with a neutral facilitator to work out the terms of the arrangement and then receiving from your lawyer independent legal advice. The mediator may prepare a Memorandum of Understanding and the lawyers will draft the agreement.
- Traditional negotiation sees the lawyers representing their clients’ needs and wishes, providing independent legal advice, and co-authoring the cohabitation agreement.
Be warned: Refusing the retainer: Lawyers may refuse to accept to act for a partner weeks before the move in date given the pressure a partner may feel to sign an agreement without the exchange of thorough financial disclosure between the partners.
Negotiating the comprehensive terms of a cohabitation agreement or marriage contract is a complex undertaking. You are challenged to consider the future given the financial circumstances you bring to the relationship. For more information on creating this important contract, please contact Lorisa Stein through the Book an Appointment button or the Contact page. You may also call her at 416 596-8081.