Cohabitation and Marriage Agreements

People seek cohabitation and marriage agreements for a variety of reasons.  Often, one party is coming into the relationship with a large asset base or a business.  He or she wishes to protect those assets or business in the event of a relationship breakdown.  A party may have received a large inheritance and he or she wishes to ensure the inheritance does not go to anyone outside of the immediate family.  The agreements are most common where parties are forming unions later in life, after having survived the dissolution of a previous long term relationship.

Cohabitation or marriage agreements may deal with only one asset, such as a family home or business, or with all assets owned or acquired by the parties. The agreements are necessary where parties wish to take themselves out of the statutory or common law regime in place at the time.

You cannot represent both parties to a cohabitation or marriage agreement, even if they are prepared to consent to the arrangement. Given the different interests of the parties in this transaction, Rule 3.4 of the Professional Code of Conduct for BC makes it clear that you would be in conflict by acting for both parties. You may only act for one party.  Refer the other party to independent legal counsel.  It may be the case where the parties have come to the terms of the agreement together and wish to have it set out formally.  In that case, you should only be retained by one of the parties and seek instructions only from that individual.  You must provide legal advice regarding the effect of the agreement on your client.  The other party will receive that same type of advice from a different lawyer.

There may be circumstances where a cohabitation or marriage agreement is intended to protect family money and future inheritances, and a party’s family members may wish to direct the content of the agreement. Nothing prohibits you from drawing a contract on the instructions of someone who is not a party to the agreement, however in such cases the potential for a conflict exists and both parties to the agreement must be referred to independent counsel as you do not represent the interests of either party.

Cohabitation and Marriage Agreements can be reviewed and overturned by the court in certain circumstances, such as where the agreement is objectively unreasonable, or if the agreement was entered into through undue influence, duress or coercion.  Cohabitation Agreements will be closely reviewed where they purport to deal with custody or waive child support obligations.  The Family Law Act has made it more difficult to set aside Cohabitation and Marriage Agreements.  Section 92 of the FLA confirms that spouses may make property agreements dividing property and/or debt and choose a different valuation method than what is set out in the FLA.  In deciding whether to set aside an agreement respecting property and/or debt, the court is required to consider s. 93 of the FLA.  Section 93 considers procedural fairness and whether or not the substance of the agreement is “significantly unfair”.  The term “significantly unfair” has not yet been considered by the courts in this family law context.

The Family Law Act will apply to both married and unmarried spouses when dealing with property division. Note that whether or not your client was married will have important implications on time limitations for advancing property claims. Pursuant to s. 198 of the FLA, a married spouse has two years from divorce (or court order declaring the marriage a nullity) to bring a property claim, whereas unmarried spouses have two years from the date of separation.  It is likely that more unmarried couples will seek to enter into cohabitation agreements once they learn that they are subject to the same property regime as married couples under the FLA.  You should ensure that you are in a position to provide the appropriate legal advice regarding the provisions of the FLA so that unmarried couples can make appropriate decisions as to whether to enter into a cohabitation agreement or be governed by the terms in the FLA.

Community Discussion

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In cases where there is a possibility that a written agreement is procedurally or substantively unfair and I represent the person who is putting that agreement forward, I write a letter outlining the potential risks of the agreement being varied or revoked by the court.  If I represent the potentially prejudiced client I have, at times, refused to witness and sign the Certificate of Independent Legal Advice.

Given the uncertainty at this time regarding the limitation period under the FLA as to the time limit for challenging a written agreement (note: the importation of the discoverability rule into the FLA), I err on the side of caution.

I have sometimes had difficulty in explaining to a client that child support cannot be waived and also the obligations of step-parents.  In these circumstances I write to the client to ensure that they clearly understand the underlying principles.

 

 It is imperative in my view ,to discuss with a client  the importance of  exhaustive financial dislcosure by both sides prior to the commencement of work on any such agreement or alternatively, priornto referring the client out to other counsel to draft such an agreement . The failure to do so renders agreements vulnerable  to being set aside/ varied such as was found recently in K.M. v I.M November 16 2016 a decision of Mr. Justiec Ball. The approach to enforcement of agreements vs. Consent Orders whould also be discussed with clients