By Marisa Coulton | Business Reporter
July 29, 2024
The stigma surrounding divorce, and subsequently prenuptial agreements, is waning over time, says Lisa Gelman, owner and founder at Toronto-based family law firm Gelman and Associates.
And prenup requests appear to be on the rise, according to several family lawyers surveyed by the Star.
“It’s no longer just for the wealthy,” says Paul Riley, founder and managing director of the Paul Riley Law Firm. “We all go into relationships with something.” Increasingly, young people are seeing prenups as a “practical, sensible, intelligent move.”
iStock-1049711150
It’s a way of protecting one another in the case the relationship goes sour, Riley adds. A prenup is only a few thousand dollars, while lengthy divorce proceedings can range anywhere from the five- to six-figure range.
Still, some couples find prenups complicated and offensive. We spoke to the experts to find out how you can put together an airtight prenup while keeping your relationship intact.
It’s all in the phrasing
People sign prenups for all kinds of reasons, says Ari Rubin, associate lawyer at Toronto-based Nussbaum Family Law.
Often, one party comes into a marriage with significantly more assets or income, and is looking to protect themselves from the Family Law Act, which dictates that all assets, including the home, should be split 50-50 upon divorce.
“(A prenup) gives you control over your finances upon breakup as opposed to resorting to what a court orders,” Rubin adds.
But raising the issue of a prenup is a “delicate” thing, Rubin says. The key thing to convey to your partner is, “this isn’t me foreseeing the end of our relationship,” he adds. “This is me protecting both of us.”
It shouldn’t be a point of contention, says Rubin; rather, an indicator that the couple is on the same page. “Most couples that come into my office looking for a prenuptial agreement come out extremely happy and still very much in love,” he says. A prenup is just another hurdle that they’ll need to clear, together.
Some consider a prenup antithetical to romance.
“I don’t think this is about romance at all,” says Riley. “It’s about common sense. It’s about being responsible. It’s about saving you from having to spend $200,000 in legal fees down the line … If (the) relationship goes south, the last thing anyone cares about is romance.”
The lesser of two evils
Though unpleasant to think about, divorces happen. A prenup is one of the most inexpensive ways to get divorced.
A prenup hovers around a few thousand dollars. (The Paul Riley Law Firm offers prenups for $3,500, for example, while Nussbaum prices theirs at $2,500.)
With a prenup in place, the division of assets during divorce becomes a lot easier.
“If the relationship ends, all we do is look at the agreement,” says Riley. “What does it say? ‘You get the couch, OK.’ ‘The couch is mine.’ So there can’t be a fight over the couch now. That can save you years of litigation, hundreds of thousands in legal fees, and a tremendous amount of animosity, because, at the end of the day, all you’re doing is honouring an agreement that both of you took time to negotiate.”
Things can get tricky if the couple doesn’t have a prenup. The divorce might end up in court, and the cost to litigate could easily top $150,000, says Riley. “That’s not hyperbole,” he says.
If the hypothetical couch is not protected by a prenup, then “it becomes something that can be split, divided and fought over,” he says. “ ‘It’s my couch. They can’t have the couch.’ … People will spend $50,000 fighting over a $400 couch, you know, just because of the emotions involved.”
Divorces can be brutal. “These are the people they loved more than anything in the world,” says Riley. “Then they’re coming to someone like myself and saying, ‘I want you to destroy them.’ ”
Do as much as you can — leave the rest to the experts
Riley strongly recommends that you and your partner hash out the details of the prenup in advance, before consulting a lawyer.
“You want to sit down with your partner, and say, ‘Hey, I’m coming in with this. If things don’t work out, I’d like to leave with this. You agree with that?’ ‘Yes.’ And they’ll say, ‘Hey, I’m bringing this in. I’d like to leave with this,’ and you agree to the terms,” says Riley.
If you work out the finer details together, Riley says, then all the lawyer has to do is write out the contract and have the other party, your partner’s lawyer, review it. (More on this later.) Otherwise, the process could get costly.
Get a lawyer. Better yet, get two
You’ll want to hire a family lawyer, not a generalist, says Riley. Also, it’s best that you and your partner have separate lawyers, he adds.
That way, it’ll be less likely for one party to say, years down the line, that they didn’t understand what they were signing off on and want to cancel the agreement, says Rubin. The lawyers will sit with both partners to ensure they are not signing the paperwork under duress.
A couple will also need to go through the process of financial disclosure, where they declare their total net worth at the time of marriage.
If, at the time of divorce, a judge finds that one or both partners have not disclosed all of their assets, they might throw out the whole agreement.
On the flip side, they may never need the agreement at all.
“If this thing works out long-term, those contracts (will stay) in the bottom of a drawer somewhere,” says Riley.
It’s over
If you and your partner do get divorced, you’ll want to review the details of the agreement with your former family lawyer or a new lawyer to brush up on the details.
You may even choose to amend the prenup or ignore it entirely, coming up with a brand-new agreement with your partner.
“Before you agree to go a different way, speak to a lawyer,” Gelman says. “It’s worth an hour of your time.”
