We get it. The heady days of wedding planning are usually spent poring over table decorations, floral arrangements and venue options. In fact, most couples will put countless hours into planning the tiniest details on the day. But what about preparing for what comes after you say, “I do?”
While you may consider broaching the topic of a prenuptial agreement something of a romance killer, their presence is on the rise in Canada. A recent study from Ipsos found that eight per cent of Canadians have a prenuptial agreement. South of the border, their presence is common, accounting for 14 per cent of married Americans. With over 38 per cent of Canadian marriages ending in divorce, it pays to protect both of your assets. This is where a prenuptial agreement becomes essential.
What is a Prenuptial Agreement?
A prenuptial agreement is a legal contract entered into by both marriage parties. It explains the respective responsibilities of each partner during the marriage, and what happens when it ends. It usually explains, in clear terms, the financial responsibilities of each partner relating to items such as property and debt. It also explains how this property and debt will be split if the marriage dissolves. In British Columbia, prenuptial agreements are called marriage agreements.
How a Prenuptial Agreement Protects You in British Columbia
The fact is, divorce is one of the leading causes of bankruptcy in Canada. A prenup, or marriage agreement, allows both parties to know where they stand, without need for protracted legal proceedings. Here are some specific scenarios in which a prenuptial agreement would prove necessary to avoid problems:
A Partner with Significant Assets
This is perhaps the most common scenario in which a prenuptial agreement is signed. If one party to the marriage possesses significantly more assets than the other, it’s natural they will want those assets to be protected. A prenuptial agreement offers security for these assets.
A Married Couple that Co-Own a Business
Entrepreneurs who co-own a business while married are strongly advised to enter into a prenuptial contract. This helps to clarify what will happen with the business after the fact, clearly explaining how assets would be split, sold or combined into one holding. This ultimately ensures smooth continued operation of the business.
Protection of Estates
If one party to the marriage is getting married for a second time, they may have children from a previous marriage. A prenuptial agreement ensures those children will receive an agreed upon share of the estate should the current marriage end.
If one party to the marriage stands to inherit a significant windfall, a prenuptial could stipulate this income is ring-fenced and not part of any divorce proceeding. This protects the receiver of the inheritance, even if the money is deposited into shared marital accounts.
Trust the Experts
Westside Family Law has years of experience in drafting prenuptial agreements. Whether you’re just thinking about it, or you’re ready to take the next steps, contact us and we’ll be happy to discuss your unique needs.