Say "I do" to a marital contract

Couples spend a lot of time agonizing over every detail of their wedding, from the venue and guest list to the colour palette. This is why it surprises me that more couples don’t put as much effort into the legalities of a lifetime together. After all, marriage is a legal contract. But who wants to talk about divorce when they’ve just gotten engaged?

Perhaps that’s because the idea of the prenuptial agreement (aka, the “prenup”) has become so loaded. The concept has been around for at least 2,000 years, so it’s not exactly new. But it’s become a common trope on television and in the movies for prenups to be invoked as a way to break up a couple whose engagement is a source of disapproval for one of the families.

But consider the term “marital contract” instead—it doesn’t come with nearly as many preconceived notions, and it can be arranged before or after marriage, so there’s no pressure to sign before walking down the aisle. Marital contracts can also be arranged for common-law partners, in which case they’re typically called “cohabitation agreements.”

While contracts of this type are often viewed negatively, I believe they can have positive implications for engaged or newly married couples. Essentially, a marital contract is a written agreement between a couple that states their rights and responsibilities around marital assets and debts, should the marriage break down (or if one person passes away).

The upside is that it forces you to have those often-uncomfortable conversations—about financial goals, assets and debts, and how you want to raise children—which could otherwise become problematic down the road. By addressing any issues upfront, it can help to build a much stronger foundation for a marriage.

Here are a few things to consider about marital contracts (keeping in mind that each province has slightly different rules).

One reason to consider a marital contract is to state how support and property issues would be resolved if the marriage breaks down. This agreement can specifically set out an amount of spousal support or waive entitlement altogether. It can also list the assets or liabilities to be excluded from any equalization, ownership or division.

In a hypothetical example, Olivia is engaged to William. It’s her second marriage, and she has two children from a previous marriage. Olivia’s parents are well into retirement, so they’ve gifted their Muskoka cottage to Olivia and William as a wedding present. Since the cottage is a gift for the couple, it could be considered a “matrimonial home,” which means it’s an asset that would be split evenly between both parties in the event of a separation or divorce.

But Olivia wants to keep the cottage in her family and eventually pass it down to her two children. So, after a conversation with William, they decide to add that into their marital contract, giving Olivia peace of mind before she ties the knot for a second time. And with a marital contract rather than a prenup, they could still make this arrangement after they’re already married.

When you’re getting married—or you’re still in the honeymoon phase—it might seem unromantic to make these agreements. But it’s far worse to have these conversations when a marriage is falling apart, when both parties are adversarial and fueled by emotion. It can also help to alleviate fears about what will happen to family businesses, joint property, and inheritances—even how children from previous relationships will be supported.

With no agreement in place, you’re subject to provincial and federal rules governing the division of assets and debts, as well as payment of spousal support. But, after many years of marriage, there could be disagreement on the value of shared assets, which assets should and shouldn’t be included, and the amount of support one person will have to pay the other (especially if their fortunes are reversed during the duration of their marriage).

Having a marital contract in place can help to avoid costly—and emotionally draining—court proceedings in the event of a legal challenge. But there are a few things that can’t be included. For example, you can’t make provisions that would diminish the rights of a current (or future) child, such as overriding a child support entitlement or custody of children.

It’s also important to follow the rules and be completely transparent in disclosing your assets to your significant other. If you don’t, they could later challenge the contract, saying they would have made a different agreement if they knew the true scope of your assets and liabilities.

Both parties should also agree with the arrangements in the marital contract. While it should go without saying, any contract that was signed with pressure or under duress—or that is exceedingly unfair to one party—could be tossed during divorce proceedings. For example, handing one partner a pen and expecting them to sign a prenup right before walking down the aisle could leave the other open for a challenge one day.

Each party should have their own lawyer give independent legal advice on the nature of the contract and what it means. Agreeing on terms ahead of time could save both parties years of heartache and countless dollars in legal fees in a potential future separation or divorce proceeding.

I believe that having these uncomfortable conversations now can ultimately create a stronger foundation for a marriage. The future, after all, is always somewhat uncertain. Not every ever after goes happily, and it may be sooner than death that you part. That’s why, when you’re getting ready to say “I do,” make it an I do times two. Make a marital contract. You’ll be glad you did.