The Perfect Valentine’s Gift – An Engagement and a Pre-nup?
By Jenna Lalani, Estate Planning and Family Lawyer, Vancouver
With Valentine’s Day around the corner, many couples will be celebrating by getting engaged. Along with choosing the bridal party, researching wedding venues or crafting the perfect engagement announcement, another item to check off the list is considering a pre-nuptial agreement. Taking the next step in your relationship is a big deal and so is protecting your assets you’ve worked hard to earn.
What is a prenuptial agreement and why is it important? A pre-nuptial agreement is a binding agreement between you and your partner that outlines division of property and support obligations in the event of a separation. It is drafted to protect your property, accounts, investments, business, and personal assets. You would buy car insurance with the to protect your vehicle, why is your relationship any different?
Upon two years of living together, or immediately after marriage, a spousal relationship is invoked. This means that in the event of a separation, a spouse is entitled to half of the increase in value of any property from the date of cohabitation/marriage to separation, even if the property was acquired prior to the relationship. A pre-nuptial agreement could protect one’s interest in the property and divide assets in a manner which the parties agree upon and deem fair.
There is a common connotation that a pre-nuptial agreement only protects and benefits the wealthy party, but the truth is that a pre-nuptial agreement protects both sides. The notion of fairness is a paramount point that the Supreme Court of Canada has implemented in Miglin v Miglin, 2003 SCC 24. A one-sided agreement has a greater potential to be challenged. Without following the right steps like financial disclosure and getting independent legal advice, a pre-nuptial agreement could be varied in the future. It is important to fully protect yourself and your partner by putting a fair agreement in place. There are several key aspects that a pre-nuptial agreement should include.
In order to fully protect yourselves, there are some do’s and don’ts when it comes to pre-nuptial agreements:
Do:
- Have a conversation with your partner about putting an agreement in place
- Discuss with one another and your lawyer about what would be a fair agreement
- Be honest with full financial disclosure
- Ensure the agreement is comprehensive
- Get legal advice and have a lawyer draft the agreement
Don’t:
- Hide any assets or fail to disclose assets
- Force your partner to sign an agreement
- Use online templates: this is a huge NO because online templates generally do not fully protect both parties and can often be challenged in the future
A pre-nuptial agreement can include a variety of terms agreed upon by both parties. While most agreements deal with support and how property is divided, there are a variety of terms that have been included in a couple’s agreement. Some people, including celebrity couple Justin Timberlake and Jessica Biel, have included an infidelity clause or a “no cheating” clause. Whether it is enforceable is a different question. In the case, D’Andrade v. Schrage, 2011 ONSC 1174, the court stated:
“…it is important to consider the purpose of the contract in question. It is not to enforce personal obligations such as the duty to remain faithful or the commitment to remain in the relationship. While people may feel that these obligations are part of the marriage “contract”, these are not the obligations that domestic contracts are meant to deal with.”
Contact the lawyers at Crossroads Law for a complimentary 20-minute consultation. We offer flat rate pricing on pre-nuptial agreements because getting protected this Valentine’s Day has a nice ring to it.
