Marriage contracts not for all but can form basis of frank financial discussion

TORONTO - Marriage contracts and prenuptial agreements can be difficult to bring up when you're in the joyous throes of planning the happy event - and certainly not everyone contemplating tying the knot needs one.

But "prenups" can be particularly handy for people embarking on a second marriage or those who stand to inherit a sizable estate. And they start the kind of serious financial dialogue every couple needs to have on an ongoing basis.

"Obviously a lot of people don't want to sign a prenup, because they don't think it's very romantic and in many cases people feel that it's awkward to bring it up," said Christine Van Cauwenberghe, a financial planning expert with Investors Group.

"As we all know if you're in a relationship and you're not completely open and honest it's almost better to just raise the issue if you feel it's a concern to you and address it head on as opposed to feeling bitter about it after the fact because you feel you're exposed somehow."

Van Cauwenberghe points out that not every couple getting married is going to need a prenup and so, she said, the first issue is, how much of an issue is it for you?

"If, for example, you have two people who are entering marriage, where neither one owns much of anything, then it's really not that much of an issue," she said.

In other cases, the push towards a contract comes from one of the families.

"In some cases there are families who say: 'You may not own very much right now, but you're going to be receiving a fair bit because we're a family of means',"said Van Cauwenberghe.

"So it's the parents who want the prenup - and in fact it's almost easier than the person getting married, because then they can blame their parents, the big bad parents, for forcing them into getting a prenup."

Others might want the contract because they simply don't want to give up financial independence.

"I know of many women who are in their 40 or early 50s and they've acquired financial stability, they're taking control and they have said, 'Now I wouldn't enter into a relationship unless we were on mutual footing, mutual ground and I would want full disclosure'," said TD Waterhouse vice-president Patricia Lovett-Reid.

"And in fact, many men are concerned when I bring it up, because they kind of go, 'Whoa, didn't expect this!' And it's not that they'e asking for more or they're feeling a sense of entitlement on either side, it's still, even in today's environment, an awkward discussion for many."

Prenuptial agreements are recognized in all Canadian provinces so long as they are properly drafted.

This includes making sure that one party provides full disclosure to the other party, that both parties received independent legal advice, or where the contract was signed under duress.

"But assuming the contract is properly drafted, you've had full disclosure, everyone has had independent legal advice, then it's certainly far less likely to be a problem."

Timing is crucial in approaching these agreements - you really don't want to bring it up the night before the wedding.

In fact, Van Cauwenberghe said that you want to start this process very early in the planning.

Otherwise, "it may take you awhile to get an appointment with the lawyer, then the lawyer has to get all the financial disclosure, they're going to have to value businesses if that's the reason why you're getting the prenup."

"That's not going to happen in a day, a week, probably not even a month," she said.

"So if you're serious, you need to start the process early and by that I mean months, plural."

People embarking on their second marriage in particular might want to think about a prenup.

Van Cauwenberghe noted that you may have already acquired a significant amount of money, or you're concerned about leaving an estate for your children from the previous relationship.

"And maybe you have been widowed, maybe you've been divorced and you're also concerned about not being burned, so to speak, the second time around," she said.

Another reason for a prenup would be taking care of children from a previous marriage.

"A marriage contract will not allow you to pre-determine future custody of children or child support," said Lovett-Reid.

"The court is not bound by those types of rules. But the court will allow you to put in rules regarding children such as religious faith teachings for example, or no physical punishment environment. There are things that go beyond just run of the mill, financial requirements, it could be very much lifestyle driven."