Recent Changes to BC’s Family Law Act
When it comes to getting married, or living in a long-term common-law relationship in the Fraser Valley, one of the most important – and most contentious – issues that a couple can face is a marriage agreement, commonly known as a prenuptial agreement. It is particularly important where one party is bringing significant assets into the relationship, often in second marriages. While discussing and forming this type of agreement can cause tension in a relationship, it is a realistic and practical step to take to prevent family law problems later on. Not every relationship goes on the way it was planned or intended. Separation and divorce sadly are distinct possibilities for many couples – and while the ending of your relationship may leave you heartbroken, a prenuptial agreement may prevent it from also leaving you broke.
The recent changes to BC’s Family Law Act mean that things aren’t what they used to be when it comes to a prenuptial agreement. Common-law spouses – couples who have lived together for at least two years – can form what’s known as a cohabitation agreement and have them honoured by a court.
However, a prenuptial agreement can be altered by the court based on “significant unfairness” if your partner decides to dispute the terms agreed to. Here are a few things to keep in mind when forming your prenuptial or cohabitation agreement to make sure it holds up even when your relationship doesn’t.
First, you should make sure that the agreement is significantly fair to both parties. This may seem obvious, but prenuptial agreements can be overturned if a court decides that it is “significantly unfair” to either you or your partner. This could mean anything from agreeing to go without spousal support to signing away an interest in something that you owned before you got together. If there are terms in your agreement that seem one-sided, even if your partner agrees to them at the time, they can be set aside because they are found to be “significantly unfair.” Therefore, it makes sense to agree to a level playing field in the event of a separation right from the start – your agreement will have more staying power if nobody is getting the short end of the stick under the agreement.
Fairness in family law requires full disclosure. For example, if you have assets in a company name, or property that you owned prior to the beginning of your relationship that may be worth a lot more now, the best thing to do is ensure that the assets are properly valued with the assistance of experts. Your agreement can provide that certain assets of yours be excluded – in fact, it would probably be fair for you to keep them! – but the important thing is that you give full disclosure of what you’re bringing into the relationship.
Section 85 of the Family Law Act indicates that the following are excluded from family property (meaning division with your spouse):
property acquired by a spouse before the relationship between the spouses began;
gifts or inheritances to a spouse;
a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for a loss to both spouses or lost income of a spouse;
money paid or payable under an insurance policy, other than a policy respecting property, except any portion that represents compensation for a loss to both spouses or lost income of a spouse;
property listed above that is held in trust for the benefit of a spouse;
property held in a discretionary trust to which the spouse did not contribute, of which the spouse is a beneficiary, and that is settled by a person other than the spouse;
property derived from property or the disposition of property listed above.
A spouse claiming that property is excluded is responsible for demonstrating that it is in fact excluded property.
While it’s important to get an accurate snapshot of what you bring into the relationship, it’s equally important to keep in mind what may happen as you live together for a longer period of time. Things will definitely change from the time you sign your agreement, and if you don’t take this into account, your cohabitation or prenuptial agreement may not be entirely enforceable. Things you might want to consider that commonly arise in family law include joint accounts and purchases, projects you might work on together (like renovations to your home), or whether one of you might leave a job to stay home and look after children. If your relationship breaks down and your agreement doesn’t accurately describe your financial situation, a court may alter it to account for the changes in your lives. While your crystal ball may be a bit cloudy today, it’s worthwhile to try and think of what your plan is for the next two, five, ten or fifty years, so that you can include flexible terms in your agreement. For instance you and your partner may want to consider putting a review clause in your agreement.
Last, but not least, both you and your spouse need to have advice from a lawyer – and not the same one. Independent legal advice is one of the most important ways to ensure that your prenuptial agreement is fair. When you hire a Fraser Valley family lawyer, our job is to work in your best interest – period. When it comes to dividing the assets of a marriage or deciding who pays support, your interests are not necessarily the same as your partner’s interests. You need someone on your side to look out for parts of a prenuptial or cohabitation agreement that may come back to haunt you and to ensure the agreement is fair.
It is strongly recommended you consult with a family law lawyer if you feel a prenuptial or cohabitation agreement may be right for you.