Many people enter into marriage thinking love will last a lifetime. The unfortunate reality is for many people, it will not. When a love story ends, the division of possessions and finances begins. It is not possible to avoid the heartache, but it is possible to avoid the headache that follows a separation or divorce.
Prenuptial Agreements are often criticized, as they are viewed as betting against one’s marriage. However, Alex Baldwin once stated, prenuptial agreements are not about the money, they are “… about having a document that states how you’ll dissolve your marriage while you still have a shred of respect for each other.”
Prenuptial agreements may be tailored to the specific needs of the parties. They typically deal with the ownership and division of property, issues surrounding the custody of any children and the parties’ respective rights and obligations regarding child and spousal support. Couples recognized as common law spouses may enter into a similar agreement called a cohabitation agreement. Both prenuptial and cohabitation agreements set out the parties’ respective rights should the relationship come to an end.
The legislation governing the dissolution of a marriage or common law arrangement is The Family Property Act (the “Act”). As a starting point, the Act provides that each spouse is entitled to one half of the family assets upon the breakdown of the relationship. Generally, this means any property acquired during the relationship, regardless of who purchased it, is family property and will be divided equally amongst the parties.
A prenuptial or cohabitation agreement allows couples to contract out of the equal division of property prescribed in the Act. A carefully drafted agreement provides the parties with certainty in a time of uncertainty, by explicitly stating the rights and obligations of the parties upon the dissolution of the relationship. The agreement does not need to encompass every single issue that may arise during the breakdown of the relationship, but can speak to one or two.
It should be noted that prenuptial and cohabitation agreements are never ironclad. There may be circumstances where the Court is able to exercise its discretion and set aside the agreement. The strongest agreements are those that are carefully drafted by lawyers, where both parties have received independent legal advice from their respective lawyers and executed free from influence from their spouse.
Additionally, any clause or provision within a prenuptial or cohabitation agreement concerning the care and support of children is always subject to the best interests of the child. The right to child support is the right of the child, and as a consequence neither parent can contract out of this right.
In light of the foregoing, you should consider a prenuptial agreement if:
- You are moving in with your partner and will become common law;
- It is a second or subsequent marriage;
- You expect to receive an influx of wealth during the relationship (gift, inheritance, successful career);
- You own a business, or a portion thereof, and wish to exclude the business and its assets from equal property division.
There are a host of other reasons why a prenuptial or cohabitation agreement may be in your best interest. If you are interested in obtaining more information regarding prenuptial or cohabitation agreements, please feel free to contact Nicole Folk or any one of our family law lawyers.
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