business
I do,
ANd I don’t? Let’s agree. Prenuptial agreements will never be easy to talk about, but knowing the facts can help you get started
t a meeting this winter I sat down with a friendly group of farmers. The conversation turned from the weather to crop prices and slowly shifted into the personal, mostly about children. We shared our farms’ stories, our wins and our defeats. Then the man with tuffs of white hair beside me bent quietly toward my ear as he told me about how a woman had stolen his heart and then his farm, a farm that had been in his family for five generations. His hands shook in anger and despair. It happens. Relationships do break up, whether you’re a farmer or not. According to Statistics Canada in 2009, the probability of divorce in this country is about 41 per cent. With second marriages and people living together, the rate of split-ups is even higher. Although there’s no official data, says Mike Rosmann, a farmer and psychologist from Iowa, it appears the divorce rate for farmers has become more equalized to the general population. So let’s not kid ourselves. Farms are big assets that hold generations of emotional punch and can be instrumental to the business. It can take the legs right out from under a farm if a key section of good land or half the quota is lost. But most people simply don’t think of getting a prenuptial agreement signed. They don’t want to consider or talk about anything that might imply their partnership might not succeed, says Rosmann. “When people get married or decide to live together, they want and expect to make their relationship work, so most don’t even think about creating a prenuptial agreement.” From his office in London, Ont., Mike Bondy, a chartered accountant and national director of succession planning with Collins Barrow, says the divorce rate of his farm clients in southwestern Ontario is 26 country-guide.ca
By Maggie Van Camp, CG Associate Editor
much lower than the average population, only about five per cent. However, that doesn’t lighten the emotional and financial impact of breakups on farms. “Divorce is the No. 1 thing I hate to deal with, and prenuptial agreements are the second-worse thing to deal with, so I try to do prenups,” Bondy says. Prenuptial agreements are basically a way of negotiating a divorce settlement ahead of time, before you even get married. Each party has to have their own independent lawyer and those lawyers tend to tell the person marrying the farmer to not sign the contract. It can be hard to get everyone to see the benefits of preplanning for something negative. “It’s difficult, but I tell many clients really, you should have a marriage contract,” says Bondy. Planning becomes even more important if you have substantial assets at the time of marriage, whether inherited or earned. Bondy says it’s more common to have prenuptial and cohabitation agreements in second marriages, where one or the other partner owns significant assets. This is often because they’ve been through a divorce or know someone who has been through a nasty breakup and want the assets to go to the next generation.
So what are the laws? The specifics of divorce and separation law vary from province to province and from state to state. The laws on their own are complicated, and then there’s the additional complicating factor that the facts of each case are unique. However, the essential idea behind all these laws is that value created or property acquired during the relationship will be equally shared on separation. March 3, 2015