Spouses who enter into a family agreement when they marry or plan to marry are entering into a "marriage agreement," also known as a "pre-nuptial agreement." Unmarried couples who enter into an agreement when they start living together or plan on living together are entering into a "cohabitation agreement," also called a "living-together agreement."

The usual point of marriage agreements and cohabitation agreements is to establish rules setting out what will happen if the relationship breaks down, although these sorts of agreements can also specify how certain things will be handled during the relationship. The odd thing about marriage agreements and cohabitation agreements that talk about what will happen when a relationship ends is that agreements like this may come into effect in a year, in five years or in twenty years, or they may never come into effect.

Married and unmarried people who enter into an agreement after their relationship has broken down are entering into a "separation agreement." Separation agreements are binding settlements of the legal issues that crop up when relationships end.

All of these different kinds of agreement are legal contracts which set out the parties' rights and obligations towards one another. They can deal with everything from who gets to keep the Kenny G boxed CD set, to where the children will live, to how the parties will deal with their mutual friends, to who gets to keep the Ford Pinto. While these agreements are usually all-inclusive, they don't have to be; some issues can be left aside for the courts to deal with.

It is important to know that despite the best intentions of the parties at the time an agreement is signed, the contents of the agreement may still wind up being evaluated by the court and sometimes changed, if one of the parties later has a problem with the agreement. While the court will pay a great deal of respect to any written agreement, if an agreement is unfair or becomes unfair the court will generally be willing to look into things and perhaps make an order that is different than what the parties agreed to in their agreement. The court's authority to poke into private agreements comes from the fact that the court doesn't lose it's jurisdiction under the Family Relations Act or the Divorce Act over the same issues that the parties dealt with in their agreement.

Marriage agreements and cohabitation agreements can be changed by the court on the breakdown of the relationship, if the court considers the agreement to be unfair in light of such things as:

1. the length of the relationship;
2. the current economic needs of the parties;
3. which party contributed what to the relationship;
4. the fundamental fairness or unfairness of the agreement; and,
5. the circumstances in which the parties entered into the agreement.

Separation agreements can be changed by the court if, for example:

1. the circumstances of one of the parties has changed significantly since the agreement was executed;
2. if the agreement is or becomes unfair; or,
3. if the circumstances in which the parties entered into the agreement were unfair.

Neither of these lists are exclusive. There are all sorts of other reasons why a court might meddle with an agreement; whether the court will or will not step in depends entirely on the particular circumstances of the parties, the nature and terms of their agreement, and the nature of the complaints one or both parties have with the agreement.

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The fundamental purpose of all family agreements is to settle an issue that has come up or could come up that would otherwise be the subject of litigation.

It is almost always preferable to settle a dispute rather than having the courts do it for you. It is usually cheaper to settle a dispute rather than take it to court, and a negotiated settlement usually gives the parties the best possible chance of maintaining a halfway decent working relationship with each other into the future.

Family agreements also give the parties an incredibly flexible way of solving a dispute since they can be tailored to suit the partical circumstances and needs of each party, and can sometimes set out very creative terms that cannot be had through a court order.

Marriage and Cohabitation Agreements

Marriage agreements and cohabitation agreements usually set out what will happen if the parties' relationship breaks down, although they can sometimes specify how certain issues will be dealt with during the relationship. These sorts of agreements are normally executed well before the parties marry or begin to live together.

It is important to know that you do not have to enter into a marriage or cohabitation agreement just because your partner wants you to or just because you're about to marry or start living with someone. While your partner may want you to sign the agreement very much, there is no legal obligation to enter into such an agreement. With or without a family agreement, remedies are almost always available under the common law, the Divorce Act or the Family Relations Act if problems crop up later on.

Marriage agreements and cohabitation agreements aren't always appropriate. Most people entering into these agreements have been married before (once bitten, twice shy), are coming into the relationship with children, are coming into the relationship with significant assets, or expect to receive significant assets during the marriage. A young couple who have no assets and no children don't necessarily have any particular need to execute a marriage agreement or a cohabitation agreement.

During the Relationship

The sort of terms people want to apply during their relationships are most often financial. That being said, family agreements are incredibly flexible and can require the parties to do anything imaginable, from caring for the children during the work week, to having a certain number of holidays abroad each year, to always wearing blue shirts on Thursdays, to doing the housework. Typically, however, people want to finalize the following kinds of issues:

• How will a joint bank account be managed? Will the parties contribute a fixed monthly amount to the joint account?
• How will common household expenses be shared? Will specific bills be paid by a specific party or will they be shared proportionate to the parties' incomes?
• How will unexpected expenses be paid for?
• How will savings and retirement funds be set up? Will each party be required to contribute a fixed monthly amount?
• How will each parties' income during the relationship be handled? What will happen if someone gets an unexpected windfall, like a lottery win or an inheritance?

Some agreements are silent on these issues, and some paint only a vague picture of the parties' respective financial responsibilities. Other agreements are mind-bogglingly detailed and cover even the tiniest details. In the author's view, unless someone is spectacularly anal retentive, the less said the better. You wouldn't want every aspect of your relationship governed by a legal contract — that's exactly the sort of thing that encourages separation.

After the Relationship

The most common reason why people enter into a marriage agreement or a cohabitation agreement is to specify how property will be dealt with if the relationship comes to an end, although agreements like these can certainly deal with child custody and access, the payment or non-payment of spousal support, and the payment of child support. Typically, however, these sorts of agreements attempt to preserve a party's interest in an asset after the relationship has ended.

The difficult thing about these sorts of agreements is that they are not intended to operate until an unknown time in the future, perhaps in five years or perhaps in fifteen, or perhaps never. It can be terribly difficult to figure out what would be an appropriate arrangment next year, never mind in ten years. In the time between the execution of an agreement and the time that it finally comes into effect, the parties' individual circumstances may have changed in entirely unforeseen ways. It is virtually impossible to predict what a couple's financial, emotional and family situation might be on the date that their relationship breaks down, if that in fact happens at all. Even the Amazing Kreskin would have a tough time with this one.

As a result of this uncertainty, marriage agreements and cohabitation agreements are more likely to be varied by the court than separation agreements, particularly when the couple's circumstances have changed in ways not predicted by their agreement or expected by the parties.

Marriage and cohabitation agreements that deal with property have one hidden problem that sometimes makes agreements like these inappropriate:

• Section 68 of the Family Relations Act expressly allows the court to vary a marriage agreement under s. 65 of the act, where the terms of the agreement are unfair.
• Section 120.1 of the act allows a cohabitation agreement between unmarried parties to be varied under s. 65 as well, even though the division of property between unmarried people is never otherwise dealt with under the Family Relations Act.

In other words, sometimes the act of making an agreement dealing with property can invoke the jurisdiction of the court, even though that was precisely what the parties meant to avoid.

Separation Agreements

Separation agreements are entered into after a relationship has broken down. There is no need for the parties to have moved out or gotten a divorce when the agreement is executed; in fact, when a couple is married it's usually best to deal with the separation agreement before seeking a divorce just in case an agreement can't be reached.

Separation agreements are always the product of negotiations between the parties and, hopefully, their lawyers. The goal of a separation agreement is to deal with all or some of the issues arising from the breakdown of a relationship in a manner that both parties are as happy with as possible. Separation agreements usually deal with the following issues:

• How will the children be cared for?
• If the children will be living mostly with one parent, how much time with the children will the other parent have?
• How much child support be paid, and which of the children's expenses will be shared between the parents?
• Should a party receive spousal support? If so, how much support should be paid and for how long?
• How will the parties' assets be divided?
• How will the parties' debts be paid out? Should they be allocated between the parties?

Separation agreements can cover everything that is a concern to a couple, even things that the court would not ordinarily deal with or be capable of dealing with.

Separation agreements are valid and binding from the moment they are executed by both parties. They operate from the time of execution and, where children, child support or spousal support are issues, continue to operate indefinitely into the future. Theoretically, a separation agreement will be binding on the parties until they die. In practice, however, most people stop relying on the agreement once the children have grown up, left home and become independent, even though the agreement continues to be legally binding between them.

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The point of a family agreement is that it is a contract that both parties intend to be bound by. In order to be legally binding and enforceable, agreements must be negotiated, drafted and executed in a specific way and include specific terms.

Entering into an Agreement

Properly negotiating and entering into a family agreement isn't simply a matter of putting the important parts on paper and signing the document. There must be fairness in the way an agreement is negotiated, fairness in the way it is drafted and fairness in the way it is signed. In addition, the people entering into the agreement must be understand the agreement and be capable of entering into it. The legal formalities common to all family agreements are:

• The agreement must be in writing. (While oral agreements have been upheld by the courts, it can be very difficult to establish the terms of the agreement, and oral agreements cannot be enforced by the courts or FMEP until a court has determined what the terms of the agreement are.)
• The parties must be over the age of majority, and cannot be under any other form of legal disability such as insanity.
• The parties must both enter into the agreement of their own free will, without any coercion by the other party.
• The parties to the agreement must provide full financial disclosure to each other and must be completely honest in describing their circumstances.
• The agreement must be properly executed in the presence of witnesses.

As a general rule, each party who enters into a family agreement should get independent legal advice — advice from a third-party lawyer, that is — as to:

1. what the agreement means;
2. what rights and obligations the agreement gives each party;
3. how the agreement does or does not limit the other legal remedies each party has outside the agreement; and,
4. how the agreement affects each party in the short- and long-term.

Each party finds their own lawyer and meets with him or her separately to review the proposed agreement. This process is important for two reasons: it ensures that the parties to an agreement know exactly what their rights and obligations are; and, it makes the agreement "stronger" by preventing a party from claiming later on that they didn't know what the agreement meant.

Drafting an Agreement

Lawyers often write family agreements in a standard format using standard terms, tailored, of course, to the specific needs and situations of the parties. Just because family agreements are often written using standard language does not mean that an agreement using different wording will not be valid because it expresses things in a different way. As long as it is clear what the intentions of the parties are and as long as the agreement is fair, the courts will usually uphold an agreement.

A British Columbia company called Self-Counsel Press publishes a variety of do-it-yourself agreement kits along with instructions for completing and executing them. While it is certainly possible to draft a family agreement without a lawyer, it is recommended that you retain one in order to safeguard your interests and ensure that the agreement will be valid and enforceable. As well, there are ample resources available for free which may help you draft your agreement. Your library may have a copy of the Self-Counsel materials available for loan. There are also a lot of guides to completing these sorts of agreements available at the library of your local courthouse.

The following are the typical elements of a family agreement, using the example of John and Jane Doe, a fictitious married couple entering into a separation agreement. Note that the examples given are not complete and are provided only to illustrate a point; they should not be used to draft your own agreement.

The Introduction

Also known as the "exordium," this portion of an agreement identifies the parties to the agreement, provides a title for the agreement, and sets out the date on which the agreement is made. This section typically looks like this:

The Recitals

These are paragraphs that set out the facts on which the agreement is based, and include the basic facts of the relationship, the names and birth dates of any children, as well as the assets each party owns and their respective incomes, among other things.

The recitals are the foundation on which the agreement is built, the facts on which the agreement is based. As a result, the recitals are also promises of a sort, in the sense that the parties promise that the facts are true. It is important that the recitals be as complete as possible because if anyone tries to challenge the agreement in the future, the recitals will set out the facts that were important to the parties at the time the agreement was made.

In the case of a separation agreement, this section typically looks like this:

...and so forth. Other paragraphs might describe the make, model and value of each party's car, the location and value of the family home, the credits cards owned by the parties and the amounts owing on them. Essentially, every fact which is relevant to the agreement must be put into the recitals.

The Operative Clauses

These paragraphs set out the meat of the matter; they form the terms of the agreement and set out what each party's rights and obligations are. In the case of a separation agreement, this section might look like this:

...and so forth. Other terms might deal with specific assets, like a car or the family home, the sharing of the children's expenses, who will pay what bills, whether and for how long spousal support will be paid, who will pay for the divorce, which laws will govern the interpretation of the agreement, and so on.

The Signatures

This is the final section of a family agreement where the parties each sign their names in the presence of a witness. The parties can sign the agreement at the same time or separately, at different times and in different locations; either way, each party's signature must be witnessed, and the witness, after seeing the party sign the agreement, must sign his or her name to the agreement. The witness usually provides some other infomation, typically his or her full name, address and occupation.

...which would be repeated for John's signature and that of John's witness.

Note that the witnesses are not parties to the agreement and the agreement cannot be enforced against the witnesses. The signature of the witness simply says that he or she saw the particular party sign the agreement.

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First of all, it is always best to have a qualified professional prepare any sort of agreement. While the Self-Counsel Press forms will likely be considered to be legally binding, a family lawyer will be best able to advise you of the duties and obligations involved in the contract, the rights you will be giving up by entering into the contract, as well as other unexpected but critical issues the agreement might involve, such as:

1. income tax consequences;
2. the transfer of property; or,
3. liabilities to third-parties and creditors.

This segment discusses a few things you might want to keep in mind for those times when hiring a lawyer is not practical or possible.

Don't Use "Legalese"

Some people are tempted to use words that sound particularly "legal," like using the word "issue" to refer to children. Avoid this at all costs, and try to use plain language to express the content of your agreement. Words like "issue" have a particular legal meaning, in this case first-generation, directly-descended heirs, that are often at odds with what people think the term means. As a result, if you use legalese there is a risk that your contract won't wind up meaning quite what you think it means.

Be as Clear as Possible

Ask yourself these questions:

• What would a complete stranger think of your agreement?
• Would the stranger be able to understand what you mean?
• Are any parts of the agreement vague or capable of more than one meaning?
• Do you understand what the agreement means?

If a term of your agreement has more than one possible interpretation, it may lead to future conflict between yourself and the other party. If there are two cars, make sure each car is identified separately and distinctly, like "Jerry's Ford Pinto" and "Mary's Pontiac Sunfire," and always refer to those cars in that way, and never just as "the car." If a term is capable of more than one meaning, change it to be more precise and more specific!

Also, remember that while you and your partner may know exactly what "the old spoons" might mean, a court may not, especially if there are a lot of different sets of spoons involved.

Never Agree to Agree

An agreement that requires a further, future agreement — "the household furniture shall be divided as Mary and Jerry shall agree" — is open to further, future conflict. Where possible, try to limit an agreement to all that can be agreed upon at the moment and try to agree on as much as possible.

Tie up Loose Ends

It is always best to tie up any loose ends. This may require some thought, as it isn't always obvious what else needs to be thought about. If a house has to be sold, who will list it and hire the realtor? Who will live in it until the sale? How will the proceeds be dealt with? These things should all be specified, where at all possible.

Be Realistic

You've got to live with the agreement; make sure it is something you can live with, not just now but in three or five years. Make sure that the obligations you must fulfill under the agreement are things that you can reasonably fulfill. Promising to pay off a credit card within a year, for example, isn't always the easiest thing to do and it isn't always practical.

Sometimes people who have separated are desperate to have done with it, to have deal signed and finished. If you feel rushed into an agreement, step back and take two (or twenty-two) deep breaths. The world will not end if you take a moment or a week to think about something. It is critical that whatever you wind up agreeing to is something that you will still agree with next month, next year and in ten more years. Be patient and take your time.

Use Sample Clauses with Caution

Before copying a term from a sample agreement into your own agreement, make sure you fully understand what that sample clause means. A clause that suits one couple in one situation may be entirely inappropriate for another couple. It is all too easy to adopt a term that sounds good or appropriate, without fully considering what that term means. Be cautious; be prudent; be careful.

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