A Prenuptial Agreement can secure your assets…
particularly in the face of such a real estate boom as we are experiencing in Vancouver and Surrey, BC. If you are laying awake at night, worrying about the risk of marrying (or even just cohabiting in common law relationship with) your new partner, we can help settle your mind. And for those of you who are depending on an inheritance to help start your lives, we recommend encouraging your parent who may be considering re-marriage to draft a prenuptial agreement beforehand. Marriage agreements, such as cohabitation and prenuptial agreements are often initiated by the adult children on behalf of a divorced or widowed parent who is tying the knot again. Often, this is to ensure the estate will flow to the grandchildren. There are numerous avenues for safeguarding your assets, but a marriage agreement is the simplest and, if followed, the most reliable.
What is a Prenuptial Agreement?
A Prenuptial Agreement – or Prenup – is one form of Marriage Agreement. It is a written contract focused largely on the future financial life of a couple who intend to become formally wed. It is created and signed before a couple marries. The idea of this type of contract is for couples to enter a marriage with assurance and clarity of how debts and assets will be divided if the relationship ends. If you are concerned about your assets flowing to the children of your new partner instead of your own children, there are numerous precautions you can take today. Don’t be tempted to swear off romance just to protect your retirement income! There are solutions.
While not every couple needs to consider whether an unequal division of assets is potentially more fair if the relationship doesn’t work out, some certainly do. There are cases where such division would be devastating, like when an income-generating entity such as a business, cannot survive division.
What is a Cohabitation Agreement?
When people live together in a common law relationship, without formally entering into a marriage, this agreement is termed a “Cohabitation Agreement”. This is an important agreement because in BC, a couple is considered to be in a Common Law relationship if they have resided together as a couple for two years. Both contracts are similar instruments that accomplish the same end: a written agreement ensuring both parties are comfortable with the division of debt and wealth in the event of relationship breakdown.
What Is Included in a “Prenup”?
Often, couples also contend with other important aspects of married life in their marriage agreement, from who will purchase vehicles and handle their maintenance to how often the in-laws may visit, how this will be financed and where -and for how long- they may stay.
The following are aspects of married life which are most commonly addressed in a Prenup or “Cohab” Agreement:
- Spousal support
- Asset division
- Retaining ownership of assets owned solely by one party
Clarification around assets to be held jointly, particularly indivisible income-generating vehicles such as
rental properties, businesses, social media channels, and pedigree breeding stock such as dogs, racehorses and other livestock.
What Should be Excluded from a Prenuptial Agreement?
Some Prenuptial or Cohabitation Agreements include the division of labour within the household. While it might be tempting to solidify who is responsible for paying the bills or doing the housework, it should be noted that extremely detailed agreements are less likely to be adhered to. An agreement that is largely ignored during married life will likely become stale in the eyes of the court. If this concerns you, it’s a good idea to consult a family law lawyer in Surrey, BC for advice.
What can invalidate a Prenuptial Agreement?
There are few limits to what may be included in a marriage agreement in BC. Child Support cannot be altered downward from the BC Child Support Guidelines by such an agreement, but if the couple had agreed to child support arrangements that were more generous than the guidelines would have required, then those provisions will likely be enforced – barring a material change in circumstance. You may check the Child Support Calculator here.
No agreement that is contrary to the Criminal Code will be enforced, and significant omissions or false statements could invalidate the agreement completely.
Will a Prenup Protect Me from My Partner’s Debt?
Not all couples begin their lives together with equal asset wealth. Sometimes one partner has accumulated significant debt, but this need not become a daunting barrier to commitment. A carefully drafted prenup and a few precautions can defend your nest-egg from becoming attached to your beloved’s financial fiasco.
Note: Your prenup can ensure a generous spouse may still gift assets to the other.
What does a prenuptial agreement cost?
Here is a good article about the cost – and the value – of a good prenup. If you and your partner are in agreement, the contract will cost very little to draft. However, if we are required to finesse the situation, and negotiations ensue it will be more costly due to the time involved.
Will a Prenup Protect My Inheritance?
If you – or your adult children – are considering marriage or cohabitation and clarifying the inheritance of an estate is concerning for you, consider contacting a family law lawyer. (We frequently give free 1/2 hour consultations about this topic). A Prenuptial or Cohabitation Agreement that is designed to preserve an inheritance in the unfortunate event of relationship breakdown is essential, particularly in this climate of rapidly climbing real estate values. Division payout upon divorce or separation too often requires a hasty sale of the family asset which was clearly intended to be enjoyed whole by future generations. Boats and moorage, Motorhomes and campsites, cottages and vacation condos have all been lost through neglecting establishment of a marriage agreement.
Dividing Capital Gains
If you’re expecting to experience substantial capital gains on pre-existing assets such as rental properties or a vacation cottage, you’ll need to account for that in an agreement, lest you may lose such assets in the division payout. Our firm is able to assist you in understanding and planning for your future financial well-being, including the preparation of a Prenuptial or Cohabitation Agreement, and a will made in contemplation of marriage. Our prior litigation experiences have informed how we will craft a solid Prenuptial Agreement for you at the outset of your relationship- one that may be part of an ongoing financial protection package to be revisited and updated in the face of significant life events. We will protect your interests.
Overturning a Prenuptial Agreement
While Marriage Agreements such as Prenuptial and Cohabitation agreements are essential for preserving the extended family’s wealth over the long term, there are such contracts which will not stand up to being tested in court. Most family law lawyers will draft a prenuptial agreement that is within the common understanding of what is fair for both parties- an instrument is simply not valid if it takes advantage of one party. Sometimes, however, what was fair at the outset ceases to be fair in the face of life’s events. The experienced lawyers at Fleetwood Family Law have repeatedly succeeded in overturning unfair Prenuptial / Cohabitation Agreements, resulting in a much greater division of assets than the original agreement provided. Our experience has informed how we can attack an unfair, outdated Prenuptial Agreement to achieve a better outcome for you.
Fleetwood Law Blog
Do You Need A Prenup or Cohabitation Agreement?
What's a Prenuptial Agreement? Also known as a Marriage Agreement, it is a contract between two people who are planning to be married. A prenuptial agreement is very similar to a Cohabitation Agreement, where the couple live together in a common law relationship. Such...