While we would like to assume all relationships last forever, statistics show that simply isn't the case. Discussing how you would fairly distribute assets in good faith at a time when you are calm and reasonably objective is much easier, faster and less expensive than attempting to come to an agreement after you separate.
Prenuptial agreements (otherwise known as “prenups”), are a way for couples to opt out of family law legislation and define the legal parameters of their relationship on their own terms. In a sense, you are agreeing to something that may never happen: the terms under which you will separate or divorce.
Similar to a prenuptial agreements, a cohabitation agreement is a contract between you and your partner. It dictates how you will divide up assets or property and deal with financial support of each other if you ever separate.
Prenuptial agreements and cohabitation can be drafted in many different ways to address a variety of issues if the relationship ends, including:
- How family property will be divided
- Who will be responsible for debts incurred during the relationship
- Whether one person will have to pay spousal support to the other
Why Get A Prenuptial Agreement Or Cohabitation Agreement?
While it is difficult and often stressful to discuss sensitive issues like money and separation while also planning a wedding, it may be a prudent step in many situations. Ironically, disputes about these very same issues are the leading cause of unhappiness in marriage and typically result in divorce. Negotiating fair terms ahead of the wedding ceremony means each party will know with certainty whether they share compatible financial and child-related goals.
Prenuptial agreements and cohabitation can save you money. You can typically avoid costly litigation by deciding on important rights and issues now, while warm feelings and good communication between you and your partner are the norm.
Who Should Have A Prenuptial Agreement or Cohabitation Agreement?
Generally speaking, prenuptial agreements can work for everyone. Here are a few scenarios where they may be especially important:
- Second or subsequent marriages — Those who get married a second or third time may have existing legal and financial obligations (such as child and spousal support payments) from a previous marriage. A properly drafted agreement ensures that those obligations are properly distributed and that both your first and second family will benefit fairly from your estate.
- People who own significant assets or shares in a company — When you get married, your spouse may be entitled to claim one-half interest in the value of your shares in assets or company investments. An agreement will protect your business interests.
- Homeowners — Couples who live together before marriage often face the issue where one partner has invested more of their wealth into the couple's shared home than the other. An agreement can specify an unequal division of the home in favour of the person who contributed the most to it. It can also detail how any increase in value of the home should be divided.
- Couples with substantial income disparity — An agreement will protect your financial interests if you earn significantly more or less income than your soon-to-be spouse.
Helping You Prepare For The Future In A Constructive Way
Talking with a lawyer doesn't mean your relationship won't last—no one can predict the future. However, knowing your options ahead of time can do a world of good should your circumstances change. We can help clarify your financial goals and let you know where you stand financially. Fill out the contact form below to set up a free consultation with a lawyer, or call us at 604-734-7911 to get started.