FINANCIAL POST
September 15, 2001

Yours, mine and ours...
By Lynne Ainsworth

BODY:
With 40% of marriages in Canada ending in divorce, couples planning to wed would be wise to sign a prenuptial agreement.

You won't find these pre-wedding contracts on the to-do list of any bridal planners, but if you own significant assets, having a prenup could save you a costly court battle down the road.

Keep in mind this is not the kind of news you want to share with your sweetheart just before the big day. Long before you set the date, choose a caterer or book the church, tell your fiancee why you believe it's important to have a prenuptial agreement. Then take some time to discuss what your contract might include or exclude. 'People don't start out in a marriage thinking it's going to fail. They want it to succeed, but let's face it -- nobody can predict the future. Couples need to think of a prenuptial agreement as part of a financial plan,' says Sandra Mews, a certified financial planner with Regal Capital Planners in Sudbury, Ont.

While there are no hard statistics, a poll by the U.S. Institute for Equality in Marriage found 16% of respondents reported having a prenuptial agreement in place.

Steven Spielberg learned these lessons the hard way when the prenup the film director had scribbled on a napkin didn't stand up in divorce court. Wife Amy Irving walked away with US$100-million -- half of what Mr. Spielberg had earned -- because a lawyer hadn't represented the actress when the agreement was signed.

Roseanne and Tom Arnold had no prenup when they divorced after four years of marriage. Newspaper reports suggested that may have cost her a US$50-million settlement.

Ted Turner and Jane Fonda settled the whole issue upfront when they wed in 1991. Ms. Fonda took US$10-million in Turner Broadcasting stock and agreed not to go after more. That AOL Time Warner stock would have fetched close to US$70-million when they broke up.

Even if you are not a celebrity or a business titan, a prenup can make good sense, especially under the following circumstances:

- Your worth exceeds your fiancee's;

- Trusts, real estate or stocks you accumulate before marriage are worth a significant amount;

- You own, or are a partner in a business;

- There are children from a previous marriage;

- Your career is expected to take off.

For a couple of 25-year-olds just getting started in life, a prenup may not make a lot of sense, says Jacqueline Mills, a partner in the Toronto law firm Doreen and Mills. 'Its biggest appeal is among people who've been through a divorce already. They may have children from a first marriage who they want to protect financially.'

Prenuptial agreements can cover everything from who is entitled to the proceeds from a family business or partnership, to the ownership of stocks, trusts and real estate purchased before marriage.

It's important to note that a prenup does not waive a spouse's rights to financial support if the marriage fails, or child support payments.

It also cannot dictate how children from the marriage will be raised.

To stand up in court, a wedding contract is considered valid only if there has been full disclosure of all assets and liabilities. The document must be in writing, witnessed and signed before the marriage takes place. Your partner must also be represented by independent counsel.

Legal fees for a prenup typically add up to $2,500, a sum considerably higher than the cost of drawing up a will. That's because the negotiation between the two parties, both represented by legal counsel, can push up the price.

'There's often an impression the other side is going to sign off on the agreement, but it's not usually the case,' says Cheryl Goldhart, chair of the Canadian Bar Association's family law division.

Waiting until the last minute to ask your fiancee to sign a prenuptial agreement is guaranteed to add strain to a relationship during an already stressful time.

It's best to broach the subject early in the relationship. But even that is no guarantee your partner will agree to the document.

It is not unheard of for couples to postpone or even cancel wedding plans once talks about finances enter the picture.

'One couple I know just needed more time to decide what they wanted the agreement to contain,' says Ms. Goldhart. 'They were lucky because they started talking about a prenup very early on. There's definitely more pressure when the hall is booked.'

Negotiating any contract is a time-consuming process. Add romance and the possibility of hurt feelings and it could take up to six months to properly prepare this legal document, a timeline that often shocks clients, says Ms. Goldhart, a family law practitioner with the Toronto firm Gowlings.

'When people come to me and tell me, 'Hey, we're getting married in a month,' I know there's a chance I won't have enough time to do an agreement and I don't take the case,' she says.

'You need a contract that will stand up in court.'