Why consider a prenuptial agreement with a foreign spouse?
The importance of prenuptial agreements is magnified when one partner is a foreign national. Particularly where there are substantial cultural differences, the parties may benefit from establishing their own rules and understanding around the financial aspects of their marriages. That understanding can provide clarity and direction, and may even prevent a protracted and costly divorce proceeding.
When one or both parties are from a foreign country, their marriages may touch multiple jurisdictions with respect to property rights, income rights and overall benefits that flow from the marriage. Those laws may differ dramatically from North American laws. It is essential that the parties take the time to establish their intentions for both during and after the marriage. For example, in some countries, income earned during a marriage is apportioned or shared equally and set apart from property. In Canada, the calculation will vary based on the province or territory of the divorcing parties but generally, income is for the individual spouse to keep and property is divided by way of an equalization payment .
With international property, issues can arise where property is purchased overseas during the marriage. Depending on the jurisdiction, that may be marital property to be divided between the spouses or alternatively, it may be excluded from the equalization process. Equally, language barriers can make determining and proving ownership and use of property overseas more difficult. Some jurisdictions have a system akin to our matrimonial home whereby property is not divisible if it meets certain criteria. To avoid any conflict, the prenuptial agreement should specifically address property rights for any overseas property.
Likewise, the issues of pensions can present unique challenges. Common law and codified forced sharing of pension plans is not universal. Is the pension of one party divisible? Is a survivor benefit to be paid from the pension of the wealthier spouse? These are just a few of the matters that should be considered in a prenuptial.
Formalities in international prenuptials
When sitting down with a foreign fiancé(e) to discuss the potential for a prenuptial agreement, both engaged parties must fully understand the legal requirements of such an important nuptial pact.
A prenuptial agreement deals with what is known as "marital property" and "marital issues," which are issues traditionally governed by State law. Thus, when entering into a prenuptial agreement, the laws of the State where the agreement is executed apply. However, oftentimes, marital property is divided pursuant to the marital laws of the country of the foreign spouse, potentially creating two potential problems if the choice of law was not correct.
First, one of the spouses may want the marital property to be divided pursuant to the laws of the foreign country. If this is the case, the prenuptial agreement must clearly state that it will be governed by the marital laws of that selected country. Typically, a State Court will defer to these other laws if so written.
Second, if the marriage dissolves in a different State or foreign country, courts throughout the United States and abroad will want to know whether the agreement was entered into pursuant to the State’s laws where the marriage occurred and/or jurisdiction where any dissolution proceeding is occurring.
Essential provisions in cross-border prenuptial agreements
Long before the wedding day is upon you, there are steps you can take to ensure everyone is protected. A prenuptial agreement is one of those tools, particularly when a foreign spouse is involved. Such an agreement is a legally binding contract between two individuals that will address areas such as the protection of an individual’s assets, the repayment of debt and how spousal support will be handled. When hired to draft such an agreement, your Florida prenup lawyer will help you to understand additional clauses that may be included as needed.
Some of the provisions that may be negotiated and included in your international prenuptial agreement will cover: Even if you’ve been with someone for a number of years and have all the same friends and interests, discussing the difficult elements involved with a prenuptial agreement is likely to be much easier than it sounds. It can be intimidating and overwhelming, but in an international marriage, it can also help to protect assets that otherwise could be claimed by the spouse during the divorce. Stipulations in the agreement can clarify the definitions of separate and marital property. Of course, a prenuptial agreement doesn’t trump any other applicable laws in the state or country when determining the separate or shared nature of assets. Any property acquired during the marriage may be considered jointly owned and may be equally divided during a divorce, no matter where it was purchased. When a prenuptial agreement is drafted correctly, it can detail what assets belong to each person and how they are to be divided in the event the marriage doesn’t last, even if the union takes place in a different country than the residence of either party.
Dealing with translation and interpretation issues
When international individuals get married in Ontario, and one is foreign to Canada, there may be an issue regarding the language of the prenuptial agreement. If both parties are comfortable with the English language, the prenuptial agreement will almost always be drafted in that language. However, if one party does not understand or speak the English language, it will need to be directly translated into their native language and properly interpreted, at least verbally, to them before execution.
According to McLellan v. McLellan, 27 R.F.L. (6th) 355, where a foreign language is involved, it is insufficient for the one party to advise the other about the contents of the prenuptial agreement and the impact and effect it will have on their rights. The Party to the contract must fully understand it from the face of the document, an independent interpreter must be used and no other person can explain the terms to the party. In classifying terms of the agreement as "legalese" created for lawyers, a judge in a decision released in 2018 stated: While these documents do seem to contain ostensible legalese, I disagree that they contain "nothing more than legal niceties." In fact , they do contain specific descriptions of the responsibilities of the parties to the marriage as well as the consequences of their failure to follow through with any one of these responsibilities. The Ontario Court of Appeal added in Leung v. Leung, 38 R.F.L. (7th) 103: The judge accepted the testimony of the husband that he spoke fluent Cantonese, that he clearly understood the documents he was signing and, furthermore, had signed similar documents in Hong Kong at the time of his marriage to the appellant. This evidence itself is sufficient to sustain the finding . . . But while it is true that fraud specific to the signing of the documents will not be easily inferred, nor will it be easily inferred from a signature alone, I see nothing in the material relied upon by the judge on this issue to support the inference of innocent fraud as contended by the appellant. When providing a translation and/or interpretation of the prenuptial to the non-English speaking spouse, ensure that the translator/interpreter is not a relative or family member of either spouse and that the parties themselves do not try to act as a translator/interpreter. This will safeguard you against any possibility of an allegation that the documents were never explained or translated properly.
Cultural issues to keep in mind when drafting agreements
Prenuptial agreements with a foreign spouse can be somewhat difficult to get started if for no other reason than each person has a different cultural background and upbringing. The agreement must strike a balance between respecting these cultural backgrounds and the realities of the states laws.
The underlying principles in many cultures is that marriage is a partnership and if one spouse puts their career on hold to support the other spouse financially or because of family duties, then the non-working spouse is entitled to some sort of provision if the marriage ends. The problem is that the United States is less sympathetic to these situations. Prenuptial agreements are contractual in nature and governed by state law (unless there is an enforceable objective to another jurisdiction). Typically U.S. state laws only require economic contributions to the marriage, so even if one spouse raised the children and never worked, if the marriage ends, they aren’t necessarily entitled to some sort of provision.
The solution is to acknowledge that cultural differences do exist and that there is the potential that one spouse feels their career should have priority over the family. Once it is agreed that there needs to be balance, then it is relatively straight forward. For example, in some cultures it may be unusual to agree that one party would take the entirety of tax refunds. The parties may come up with formulas to determine how to share in the proceeds. Further, because what constitutes earnings may be different for each party, the parties may need a more expanded definition of the type of income each will share in.
Cultural considerations do not mean that the parties need to sign away their rights. It just means that there needs to be compromise and understanding of the different cultural expectations.
Retaining international prenuptial legal experts
Unions across borders can bring about many wonderful things, but having a pre-existing agreement that accurately accounts for the jurisdictional shifts in assets and liabilities that may occur as a result of divorce or death is not one of them. Though the intention may be there for both individuals to separate assets based on a previous agreement, the enforceability of any prenuptial agreement is dependent on the laws of the jurisdictions in which the assets arose. This means that individuals in international marriages or unions should seek the advice of legal experts who are familiar with the international matrimonial codes. The laws in one state, province , or country may not be compatible with those in another, so it is very possible that some aspects of an international prenup can be rendered invalid based on the governing code. Therefore, even if both partners in the marriage are in agreement over the terms, some may not be enforceable due to legal incompatibility, or because those terms do not meet the qualifications of the local jurisdiction. The ideal process would involve both individuals to consult marital experts from each jurisdiction to prepare an enforceable agreement. By doing this, both parties stand the best chance of creating a useful document that provides legal protection to all those involved.