Getting married or moving in together? A contract might be more important than you think

Introduction

Prenuptial Contracts (often referred to as “Prenups”) are one of three types of marriage contracts which spouses or potential spouses can enter into. Marriage contracts allow spouses to opt out of certain legislation which would otherwise determine their legal rights between each other.

In Canada, when a couple is legally married, the federal Divorce Act outlines and governs with respect to the rights that each spouse has. However, in Saskatchewan, many pieces of provincial legislation also apply, both for marriage and common-law couples.

Different Types of Marriage Contracts

• Prenuptial Agreements are the type of marriage contract that most people seem to be familiar with. These are prepared and signed after a couple is engaged but before they are married.
• Postnuptial Contracts are less common, but serve the same purpose as a Prenup. The only difference is that they are executed after a legal marriage.
• Cohabitation Agreements are signed between couples who are currently in a common-law relationship or anticipate entering into a common-law relationship at some point in the future. They can be prepared such that they would terminate if the couple legally marries, or so that they would continue to operate in the same way a Prenup would after a marriage.

Myths about Marriage Contracts

There are numerous misunderstandings about marriage contracts, and Prenups in particular. Television shows and movies regularly use these contracts as plot devices, typically casting them in a negative light. The reality, however, is much different. A few myths about Prenups and other marriage contracts are as follows:

Myth 1: A marriage contract is drafted by one spouse’s lawyer, and the other spouse is expected to just sign it

In Saskatchewan, for a prenup or any other contract between spouses to be presumptively binding with respect to family property, both spouses need to have their own lawyer, as confirmed by Section 38 of The Family Property Act. That is not to say that other agreements would never be considered by the courts, but when such agreements come before the courts, courts are required to consider the “fairness of the negotiation process” (see Anderson v Anderson, 2023 SCC 13 paras 64-72). The best way to ensure that marriage contract will be upheld in the future is for there to be a fair negotiation process.

Myth 2: Getting a Prenup means you think your relationship is going to end

This is not entirely a myth, but only in the same way it is not a myth to say “taking out life insurance or getting a Last Will and Testament means you think you are going to die”. No one likes talking about it, but every relationship ends at some time. A properly drafted marriage contract contemplates what happens when a relationship ends, whether through a separation or death.

There remains a high divorce rate in Canada. Statistics from Statistics Canada show the divorce rate lowering slightly, but seems to suggest that it remains around 40% (meaning that 40% of married couples will divorce before their 50th wedding anniversary) (Statistics Canada, Table 39-10-0051-01 “Number of divorces and divorce indicators”).

There are many different reasons why couples divorce. A lack of communication or willingness to talk about important and challenging things is one of the reasons divorce lawyers regularly hear clients cite as their reason for separation. Many clients also only have a preliminary understanding of the legislation that defines their marriage or common-law relationship until dealing with the separation.

A Prenup, especially one negotiated with the assistance of a Family Mediator, can be an excellent opportunity for a couple planning to build their life together to learn about what their marriage means legally, and to work together and communicate about how they might want to define the relationship for themselves.

Myth 3: You should wait until you have lived with your new partner for a while before thinking about getting a Cohabitation Agreement

For family property purposes, once a couple is cohabiting for two years, they are considered “equivalent to married”. What many people do not realize is that cohabitation has a complex legal meaning. A couple can be considered to have started cohabiting even when they both had separate addresses. Simply receiving your mail at your old address or filing your taxes as single may not help to refute this.

Any time a relationship is becoming serious enough to sleep in the same bed most nights, or share other important aspects of their lives together (and particularly before a couple makes an active decision to move in together) a cohabitation agreement should be seriously considered. Legal advice at the start could save an unwanted “equivalent to married” designation down the road.

Myth 4: If neither spouse has much property, they do not need to worry about a prenup

In Saskatchewan, certain pre-existing property brought into a marriage might not be divided between couples who later separate, while other pre-existing property will. It is important for couples to have an understanding of these distinctions.

For the couple entering a marriage or common-law relationship with few assets, there are still many other considerations they might not have accounted for which could be addressed with a marriage contract. Just a few of these are:

1. Family Inheritance
2. Spousal Support
3. Debts

Conclusion

The laws impacting spouses are complex. They are also ever changing. Parliament passed significant amendments to the Divorce Act which came into effect March 1, 2021. That was the 13^th version of the Divorce Act, with some changes smaller than others, since January 31, 2003.

A properly drafted marriage contract allows spouses to define their own legal terms of their relationship, often being able to opt out of the current and future legislation to whatever extent they choose.

If you have questions about common-law relationships or marriage contracts, contact a member of our Family Law Group.