Is a prenuptial agreement right for you and your spouse?
When two married people decide to separate, Canadian law dictates that any assets they accumulated during the marriage are divided according to a prescribed formula. A Pre-Nupital Agreement, in contrast, allows a couple to determine a different sharing of assets on death or separation.
For example, let’s assume on the date of marriage that the husband owned a business. Five years later he decides to divorce his wife. Under Canadian law, his spouse would be entitled to a share of any increase in value of that business accumulated during the marriage. However, if the parties agreed in advance that any increase or decrease in the value of the business is not going to be shared, that understanding could be written into a Pre Nuptial Agreement.
Another common scenario involves two individuals who plan to get married and both have children from a previous marriage. In this situation, both parties often want any assets accumulated during their lifetime to go to their family members and this is stipulated in a Pre Nuptial Agreement that renders Family Law not applicable.
See what’s right for you by contacting us at least three months in advance of your marriage to arrange a no-obligation introductory consultation. And remember this last tip about Prenuptial Agreements – the best time to negotiate these agreements is when you are talking to a future spouse, not a future ex-spouse.
Quick Facts about Prenuptial Agreements
Think ahead – Consider what should happen when the spouse that owns the family home dies. Should the surviving spouse be allowed to live in the house and, if so, for how long? Another option is to stipulate that the surviving spouse can purchase the house from the deceased spouse’s estate.
Things change – While a Pre-Nuptial is a binding document, both parties can decide that changes are necessary to reflect new circumstances. Even after as little as ten years it might be prudent to make some updates.
Decide what should happen with jointly owned assets – A Pre-Nuptial Agreement can specify how a jointly held asset be divided in the event of a separation or divorce. This means thinking about not just the division of the asset. You also need to consider what formula will apply and how funds will be distributed. Remember, conflict emerges when there are “grey areas” that are open to interpretation or dispute.
Pre-Nuptials are not just for second marriages – Even if you are marrying for the first time, it may make sense to have a Pre-Nuptial, especially if you are bringing into the marriage financial assets, children or both.