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Family Law Blog

The What, Why and How of Prenuptial Agreements

The What, Why and How of Prenuptial Agreements

For most couples, signing a prenup isn’t exactly romantic. No couple in love likes to think about whether or not the relationship will stand the test of time. However, the marriage statistics are 50-50, and it’s good to be prepared for a worst case scenario. In the long run, it may save you time and money in extra legal fees. 

What’s a Prenup?

A prenuptial agreement (or “prenup”) is an agreement that outlines how to fairly distribute assets in the case that the relationship dissolves. The legal document outlines responsibilities of both parties during the relationship and how to proceed if it ends. When drafting a prenup, it is strongly advised that each party seek out independent legal advice. The agreement must be signed by both parties and a witness, and in compliance with B.C. laws. 

In British Columbia, prenups are also referred to as marriage or cohabitation agreements. Since changes to the Family Law Act in 2013, common-law relationships are considered equal to marriage. According to the law, a common law relationship is if you live together in a marriage-like relationship for two years or more continuously.

A prenup is primarily concerned with the division of finances. Importantly, the agreement is not about winners/losers and who gets the better deal. Rather, a prenup is meant to protect both parties in the case of a breakup. 

Prenups outline the following: 

  • How family property and assets will be divided
  • Who will be responsible for debt incurred during the relationship
  • Whether one person will pay spousal support to the other

If You’re Already In a Marriage or Common-law Relationship, It’s not Too Late 

Although the “pre” in prenup insinuates something before nuptials, you can also sign a postnup. In BC, the Family Law Act uses the term “agreement”, with no specified timeline. Therefore, you can draft and execute a prenup, postnup or cohabitation agreement during a relationship. 

Prenups Save Time, Stress & Money

Family finances are often a sore spot in relationships, and even more sore in broken relationships. That’s why it’s important to discuss how to divide finances before the relationship turns sour. Otherwise, emotions will run high, and it may get ugly. If it gets ugly, more legal fees will build. If you don’t spend a little bit of time and money on a prenup now, it may cost you significantly more in the future. 

If the issue lands in Court and there is no agreement in place, all property, assets and debts will usually be divided 50/50 between partners. This is stated in Section 81 of the Family Law Act

Subject to an agreement or order that provides otherwise and except as set out in this Part and Part 6 [Pension Division],
  • Spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution, and
  • On separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt.

Prenups define the legal parameters of the relationship without the need for family law legislation. If your relationship turns sour, a prenup saves you additional emotional stress, time and money. 

Prenups are strongly suggested for the following scenarios: 

  • Second or consecutive marriages
  • Couples that own property together
  • Couples that co-own a business 
  • Couples with significant income disparity

If the Prenup is Unfair, It Can be Cancelled

Prenups can be set aside by the Courts in some circumstances. This is often due to unfairness or undue influence. The BC Family Law Act states that if an agreement is significantly unfair for one party, the Courts will interfere. 

A prenup might be considered unfair if:  

  • Only one party obtained independent legal advice
  • A spouse fails to disclose all financial information, including access
  • A spouse exploits their partners’ emotional and psychological wellbeing 
  • One party was not granted an appropriate time to negotiate
  • The agreement is not in compliance with B.C. laws
  • There is history of oppression through physical, emotional or financial abuse 

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.