Pre-Nuptial Agreements: Who are they good for?
By Amanda Marsden, Partner, Senior Family & Estate Planning Lawyer, Calgary
When people think about pre-nuptial agreements the idea often brings to mind wealthy celebrities entering into contracts because they know their marriage is not going to last. It is important to realize that these types of agreements are not just for the wealthy. An agreement setting out the financial terms of your relationship is important for everyone, not just those with significant assets going into a marriage. A marriage can have unintended financial results.
An agreement with respect to the financial terms of a relationship is also not just for couples who are about to get married. Couples who are entering a common law relationship should seriously consider a cohabitation agreement. Also, couples who are already married can enter into what is often described as a marriage contract or post-nuptial agreement. The benefits of a traditional pre-nuptial agreement apply to these other types of agreements as well.
Having a discussion with your significant other regarding a pre-nuptial agreement can seem like a daunting or awkward task. However, once both spouses understand the purpose behind the agreement, it may not be as difficult as originally thought.
The law of divorce and separation is often misunderstood. The division of assets and the way that spousal support / alimony is paid can be a big surprise. One of the benefits of coming to an agreement while the relationship is still in a good place is that both parties get legal advice regarding the laws in this area and then they get to decide how they would like the law to apply to their particular situation. Both spouses can agree to a customized division of assets that reflects their unique situation and their expectations of each other and of their relationship. Without this customized agreement, the law may not provide solutions that either party are happy with.
Pre-nuptial agreements also provide a degree of certainty for both parties. It is daunting if the marriage breaks down and you do not know what your financial circumstances will look like. For our clients, the stress involved in relationship breakdown is often tied to the uncertainty they feel with respect to their financial future. This uncertainty and corresponding stress can be avoided if a prenuptial agreement is in place.
Having a cohabitation or prenuptial agreement can also save legal costs if the relationship does end. A family law case can involve a great deal of time dealing with issues of asset division and spousal support, so if those issues are already settled by way of a pre-nuptial agreement, the cost of divorce can be significantly reduced.
Some of the other benefits having a pre-nuptial agreement or cohabitation agreement in place include:
- Protection for inheritance and assets owned prior to the relationship and any increase in value of those assets;
- Structuring any future spousal support payments;
- Resolution of how debt issues will be dealt with; and
- An ability to plan for tax implications of relationship dissolution.
If you are interested in learning more about pre-nuptial, post-nuptial or cohabitation agreements please contact the lawyers at Crossroads Law. We have extensive experience in drafting these types of agreements and can give you advice on what agreement would be best for you and how to talk to your significant other about its potential benefits. Also, we typically offer these agreements at a flat rate so that you know exactly how much you are going to pay.
