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Are Pre-Nuptial Agreements Enforceable?

We've recently been asked whether Pre-Nuptial Agreements are enforceable, or if they automatically "expire" after a certain period of time. The short answer is that Pre-Nuptial Agreements are a valuable tool by which assets can be preserved in the event of divorce and do not expire unless terminated by written agreement. Pre-nuptial Agreements are particularly useful in the case of second or third marriages where one or both parties want to avoid division under the Matrimonial Property Act and preserve assets for their children. Although Pre-Nuptial Agreements aren't very romantic, they certainly fit the old adage: "an ounce of prevention is worth a pound of cure!"

In Alberta, the Matrimonial Property Act states that any property owned prior to marriage is exempt from division in the event of a divorce, but any increase in the value of that exempt property and any property acquired subsequent to marriage are presumed to be equally divisible. Life insurance payouts, personal injury proceeds and inheritances received during the marriage are exempt from division. When a person comes into marriage with significant assets, he or she may opt out of the Matrimonial Property Act by entering a Pre-Nuptial Agreement in which both parties agree matrimonial property will not be divided in the event of a divorce. To be effective, Pre-Nuptial Agreements should attach schedules of both parties' assets, signed "Acknowledgements" that they are waiving rights under the Matrimonial Property Act and certificates of independent legal advice. Provided the Agreement contains these items, Pre-Nuptial Agreements are legally binding and have no "expiry date".

There are circumstances that weaken the validity of a Pre-Nuptial Agreement. These include not only the absence of waivers or independent legal advice but also coercion/duress, fraud, absence of financial disclosure and unconscionability. In Alberta, the case of Lemoine v. Griffith [2012 ABQB 685] is the only reported case where a Pre-Nuptial Agreement was successfully overturned - primarily on the ground that counsel for the wife did not provide adequate or any independent legal advice. That case is under appeal and a decision has yet to be issued.

Contact Kirk Montoute LLP to learn if you will benefit from a Pre-Nuptial, Post-Nuptial or Cohabitation Agreement.

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