Post-nups growing in popularity to protect assets, say lawyers
TORONTO When Canadian heart-throb Justin Bieber secretly married model Hailey Baldwin last year, tabloids said they didn’t bother with a fancy ceremony or a pre-nuptial agreement to protect their millions.
“He was an idiot not to get a (prenup), but we have seen Justin do a lot of stupid stuff,” joked Farrah Kohorst, a Calgary-based lawyer specializing in family law.
But according to Kohorst, 24-year-old Bieber — estimated to be worth $265 million — and 22-year-old Baldwin — rumoured to be worth $3 million — aren’t out of ways to keep their future earnings protected from each other, if they desire.
Kohorst and other experts say the key to safeguarding assets when you didn’t sign a pre-nup lies in a little-known agreement that is growing in popularity: a post-nup.
Often called a marriage contract under the Family Law Act, a postnup can be signed before or after a wedding and can include clauses to decide what will happen to money, real estate, inheritances and pets if a marriage is dissolved.
Kohorst and other lawyers say most people are prompted to sign a post-nuptial agreement at the behest of their parents or because they want to embark on a financial venture their spouse isn’t keen on sharing the risk for, they suddenly snag a large inheritance or gift they want to keep from their partner or they ran out of time to draw up a pre-nup while preparing for their big day. “I really pump these to my friends and family because we are looking at 40 per cent divorce rate and 60 per cent common-law breakdown (in Canada).”
She often recommends couples who are trying to discern what to put in a post-nup focus on their goals and think about whether children, new businesses or windfalls are headed their way. If someone agrees to waive their spousal support and not share jointly held property, she often suggests a settlement where the amount of money they get for the dissolution of their marriage is based on the length of the relationship or is a portion of the net value of their assets.
She also advises clients to look out for conduct provisions — clauses surrounding infidelity, weight gain and a minimum number of times a week or month a spouse has to agree to sex. They’re popular in the U.S., but are usually frowned upon and often not relevant to legal rights in Canada, she adds.
Kohorst also said most clients don’t realize post-nups aren’t boilerplate documents that can be drawn up in a few days on the cheap. Most take more than one meeting and require several financial disclosures. “There is a difference between marrying somebody you think is worth $1 million, when they are really worth $50 million,” she said.
In rush scenarios, Kohorst has seen post-nups come together in six to eight weeks and in situations with prominent families with plenty to protect, she’s charged up to $60,000 to represent her client.
However, most people will spend a few thousand dollars for agreements that take three to four months to draw up.
Kohorst pushes her clients to avoid signing them the same month as their wedding because if one is signed too close to the wedding, it can later be argued the agreement was made under duress. If clients insist, she adds a clause noting both parties agree they are not committing to the agreement under duress.
Rick Peticca, a Toronto-based senior associate specializing in family law, said he recommends post-nups when clients are keen on getting a pre-nup but have six months or less until their wedding, putting themselves in a danger zone for duress arguments.
He suggests signing an agreement well before the six-month mark to avoid those troubles and make use of negotiating advantages you have before tying the knot.
“You have an option not to proceed with the wedding,” he said.
He has seen people pursuing post-nups long after their marriage began in hopes of using the agreements as a “security blanket” against situations that recently arose. “I have a case right now where my client’s spouse was unfaithful and while they work things out, they want something in place,” he said, noting that post-nups should be made to fit each person’s unique situation and concerns.