Prenups in BC: What a Marriage Agreement Can and Cannot Do

Many couples planning to marry, or to marry again, want to settle money questions while things are calm. In BC a prenup is usually called a marriage agreement, or a cohabitation agreement if you live together without marrying, and the Family Law Act lets spouses set their own rules for dividing property and debt.

Those rules have limits. Some terms can be reviewed by a court years later, and terms about children made before separation are not binding at all. Knowing which is which helps you put your effort where it counts.

Who the property rules cover

BC's Family Law Act applies its property division rules to married spouses and to unmarried couples who have lived together in a marriage-like relationship for at least two years. A relationship is treated as starting on the earlier of the day you began living together in a marriage-like relationship and the day you married, so if you already share a home, the clock may have started well before the wedding.

Couples can opt out of those rules by making an agreement, and a property agreement can be made at any point in the relationship. Whether you call it a prenup, a marriage agreement or a cohabitation agreement, what counts is what it says and how it was made.

The default rules an agreement can change

Without an agreement, both spouses are entitled to family property and responsible for family debt when they separate, regardless of who used it or paid for it, and the starting point is an equal split. Some property is excluded, including:

• property a spouse owned before the relationship began;
• gifts and inheritances a spouse received from someone else; and
• some damage awards, insurance payouts and trust interests, with exceptions.

Two details often surprise people. Any increase in the value of excluded property during the relationship is family property, and the spouse who says something is excluded has to prove it. For more on the default rules, see our guide to dividing family property in BC.

What a marriage agreement can do

Section 92 of the Family Law Act lets spouses agree on how property and debt will be divided. An agreement can:

• divide family property and family debt equally or unequally;
• exclude items that would otherwise be shared, such as the growth in value of a business or home one of you brings into the relationship;
• include items that would otherwise be excluded;
• value property or debt differently from the way the Act would; and
• say who will own or keep a companion animal, or that you will share one.

An agreement can also deal with spousal support. The Act allows spouses to agree on when spousal support will change or end, and even to release each other from spousal support altogether. Our guide to spousal support in BC explains how support is normally assessed.

What it cannot lock in: terms about children

A marriage agreement signed before the wedding cannot settle arrangements for children you may have later.

• Parenting arrangements. An agreement about parenting arrangements can only be made at or after separation, and a court must set aside one that is not in the child's best interests.
• Child support. The same timing rule applies to child support. Even an agreement made at separation can be set aside or replaced if a court would order something different under the child support guidelines.

What helps a marriage agreement hold up

Put the agreement in writing, with each spouse's signature witnessed by at least one other person; the same person can witness both signatures. A court can set aside or replace property terms if, when the agreement was made:

• a spouse failed to disclose significant property or debts, or other information relevant to the negotiation;
• a spouse took improper advantage of the other's vulnerability, including ignorance, need or distress;
• a spouse did not understand the nature or consequences of the agreement; or
• other circumstances existed that would make a contract voidable under the common law.

Those grounds point to the practical steps:

• Full financial disclosure. Exchange complete lists of assets, debts and income, with values and supporting documents, and attach them to the agreement.
• Separate lawyers. Independent legal advice is not one of the formal requirements in the Act, but it is the clearest answer to a later claim that someone did not understand the agreement or was taken advantage of.
• Time. Start months before the wedding. An agreement signed days before the ceremony invites an argument that one person was under pressure.
• Review. Revisit the agreement after major changes, such as having children, buying a home or starting a business.

Our article on separation agreements in BC looks more closely at how courts approach setting agreements aside.

Why support terms are easier to reopen than property terms

Even when none of those problems existed, a court can set aside or replace property terms that are significantly unfair, judged by how much time has passed since the agreement was made, whether you intended it to give certainty, and how much you have relied on its terms.

The test for spousal support terms is broader. Along with similar questions about how the agreement was made, a court can look at changes in each spouse's condition, means, needs or other circumstances since signing, and at whether the agreement meets the objectives of spousal support. That makes a support waiver signed before years of marriage, children or a career break more open to review than a property term.

Line up your will and your home title

A marriage agreement mainly governs what happens if you separate. It does not take the place of a will, and the way you hold title to a home you buy together should fit what the agreement says. Reviewing the three together helps them point in the same direction.

Planning to marry or move in together? Get the agreement right early

Our family lawyers can explain how BC's property and support rules would apply to you, draft or review a marriage or cohabitation agreement, and work through financial disclosure with your partner's lawyer.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.