Standstill Agreements

Standstill Agreements

standstill agreementsStandstill Agreements

Best practices are those actions or processes which generally offer the most effective and well-received outcome for their clients. Not a rule or enforceable law, best practices are essentially practice guidelines which over time have proven a superior course of action.

For those partners who are planning a wedding and want to negotiate a Cohabitation Agreement before their wedding, a family law lawyer knows that the best practice is to commence those negotiations no later than four months prior to the date of marriage. The closer to that wedding date, the more likely attention will be split between focusing on legal terminology and concepts and ensuring that there are no spelling errors on the invitations. As the date grows closer emotions elevate and interfere with the need for clear-headed decision-making. Being overwhelmed is not the state of mind for a wedding or for entering into a legally binding contract.

Despite the best intentions of each partner to settle the terms of the Cohabitation Agreement, any terms reached by oral consensus or by certain actions taken in the belief that a binding agreement was reached, may not be legally binding family law agreements. Although an argument that actions are undertaken may offer some weight towards demonstrating a settled intention not to share in the value of property owned by one partner, it would be unwise to rely on that assumption if there were to be a breakdown of the relationship.

Whether time passes too quickly or negotiations haven’t yet crystallized into a signed Cohabitation Agreement, the intent to resume negotiations after the date of marriage can be captured in what is referred to as Standstill Agreements.

Freezing Intentions: Standstill Agreements

Standstill Agreements signed by both parties upon full and frank financial disclosure to the other and with independent legal advice ‘freezes’ ownership to what each party held prior to the date of marriage as if no marriage took place. The parties agree in writing that there will be no sharing of property owned by the other or, more precisely, the sharing of the net value of the other’s property.

The contractual period of validity of Standstill Agreements is set to a specific term such as one year to allow the parties the time to negotiate a more complete contract than they were able to accomplish prior to the marriage. Standstill Agreements cease to be in effect if a Marriage Contract has been executed in writing, each party signing before a witness, and dated or when the Standstill Agreement expires. As the parties will now be married, the name of the contract will be a Marriage Contract.

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