Pre-nup: Do you really need one?

by Peter Magee on November 12, 2010

For the record I am against prenuptial agreements.

I have clients come to me and say, “I would like a pre-nuptial agreement.  I just want what’s fair.”  My reflex response as a family lawyer is to say, “Let’s set the record straight.  If you just wanted what was fair you wouldn’t need the pre-nuptial agreement. What you want is an agreement which is not fair and is in your favour.”

Having said that, it’s not surprising that I don’t do as many pre-nuptial agreements in practice, as maybe I could.

There are, of course, exceptions to the rule. Families with enormous amounts of capital invested in their business, such as farming families often need the financial security of a prenuptial agreement to protect their assets.  Enterprises like these and the family relationships that are built around them, are often dependent upon keeping the business assets intact.  In the event of a family law situation where an owner or a partner in a family farm is obliged to buy out their spouse, the entire enterprise faces either a draining of working capital or a carve up of the income-producing asset which compromises everyone involved.

In circumstances where an extended family unit is co-dependent or the economic liability of the enterprise is dependent upon those assets, pre-nuptial agreements make a lot of sense.  An example of the use of pre-nuptial agreements, or financial agreements, as they are referred to in the Family Law Act, as a succession planning tool was shown in the article titled ‘Pre-nup a succession secret’ appeared in the Weekly Times NOW on 28 September 2010. It involved a case study where such agreements were used in the fifth- generation family business of Brown Brothers Wine Makers.

If you have substantial family assets that require protection by a pre-nuptial agreement (financial agreement) or have been asked to sign a pre-nuptial agreement by your proposed spouse and would like to discuss it with us, please do not hesitate to contact us for advice on your situation.

{ 1 comment… read it below or add one }

Rebecca Maxcy July 27, 2011 at 5:21 am

I have been dating a man for 5 months. No where near the idea of marraige or living together. This discussion (or arguement) resulted from his “hypathetical” talking.
First let me describe the circumstances. I am a single parent of 3 children (youngest 10), own my home, have a retirement, life insurance etc. I also stand in the furture to receive asets and investments/savings etc from parents.
He is a parent of 2 children from a previous marraige (youngest is 16), he has a retirement and life insurance. He also has about 20 grand in savings. No home as he lives in an appartment.
We both make about the same hourly however he does “make more” do to him working overtime regularly.
A prenup of any sort was the least of my concerns as I strongly feel if I marry a second time I will make sure I am absolutely sure as if I wouldn’t die for them, I don’t marry. Simple so I thought.
He however feels different. He plans to save over the next few years and purchase a house cash (this is great if he can).
He advised he plans to have a will and also wants a prenup signed prior to marraige in case of divorce or death. If either would occur I would have 3 months to move out and if it is death the home would belong to his estate and would go to his children. I was/am a bit appauled by this. The divorce aspect doesn’t bother me if I am the one doing the “leaving” however I feel this could somehow be used agaisnt me if I were to ever fall on my luck. The death aspect seems absolutely cold hearted.
I could understand if he was bring more to the table then myself however that is truely not the case. A prenup in case of divorce could protect both parties and I would be open to that (however I still don’t like it). Oh yeah, he did advise if he died during a marraige I would be allowed to receive half of his retirement. The other half and life insurance would go to his children.
I need a viewpoint from the outside looking in. I have seriously been doubting this relationship since his “hypothetical” talk with me.

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