For many couples a prenup is unromantic and counter-intuitive. After all, if couples believe they may separate in the future, why would they be together? The truth is, spouses already have a prenup: it’s called the Family Law Act, it was written for you by the government and you may not know what is written. The benefit of getting a formal cohabitation or marriage agreement is that both parties will know and can provide exactly how money will be distributed going forward. Rather than seeing a prenup as dooming the relationship to fail, a nuptial agreement enables couples to keep love separate from money and thereby helps prevent separation. Prenups can not only set out how money will be distributed in the event of separation, but also how money will be distributed and allocated toward common goals during the relationship.
Assets
Ownership of assets that couples seek to clarify include: sole/joint bank accounts, investments, business assets, pensions, changes in property value, pets, antiques, vehicles, intellectual property, insurance, and much more. If you own it or may own it in the future, it should be considered.
Spousal Support
In addition to the division of assets, one of the most important (and often forgotten) aspects of a prenuptial agreement is the determination of spousal support. Spousal support obligations can exceed the value of divided assets.
Debts
If your spouse gets him or herself into financial trouble, this can put you at risk for assuming debts. An agreement can keep the risk of the other person’s risky business from impacting you in the future.
Timing
Prenups can be made at any time and need not be made before spouses become spouses. It is best to make agreements before there is a disagreement. If a disagreement is on the horizon, an agreement is the best way to avoid costly litigation. An agreement should be updated every few years as there are changes in circumstances.
Separation Agreements
Separation agreements are similar to cohabitation and marriage agreements except there is less focus on the future and more focus on the present. Both spouses must fully disclose their financial positions to each other and willingly enter the agreement. Both parties should be represented by lawyers in order to strengthen the agreement. An agreement that is not made properly will likely be set aside.
The cost for family law agreements ranges between $1,200.00 and $3,000.00 and can take anywhere from a week to a month to complete. While this is expensive, the value of assets protected and the cost of litigation are almost always much higher. Having a skilled lawyer carefully draft your agreement in compliance with federal and provincial legislation is preferred by courts over do-it-yourself agreement purchased over the counter.