Many people assume that prenuptial agreements are only for the wealthy or for couples who expect their relationship to fail. In reality, a well-drafted prenuptial or cohabitation agreement is a planning tool that allows couples to make important financial decisions together while their relationship is strong. More than preparing for the worst, these agreements provide certainty, reduce future conflict, and ensure that both parties understand their rights and obligations from the outset.
In Alberta, these agreements have become increasingly important. Under the Family Property Act, once an unmarried couple has lived together in a relationship for at least three years, or if they have a child, property they acquired during the relationship becomes family property subject to division. In communities like Grande Prairie, where many couples establish households, purchase property, or grow businesses before marrying, a prenuptial or cohabitation agreement can protect both parties’ expectations.
With that in mind, we’ve decided to create a list of the top ten reasons why you, or maybe someone you know, should consider getting a prenuptial or cohabitation agreement.
1 – Protects Presently Held and Future Property
Fundamentally a prenuptial agreement is used to protect past, present, future, or all or some property from being divided between spouses upon relationship breakdown.
2 – Creates Practical Conversations About Finances Before Marriage
Drafting a prenup requires both parties to disclose their financial circumstances to each other their assets, debts, income, and financial obligations before signing. Not only does this ensure the agreement is enforceable, it also encourages honest conversations surrounding financial goals, spending habits and expectations for the future.
3 –Clarifies Responsibility for Debt
Should each partner share existing debts, or keep them separate? A prenup can clearly outline who is responsible for which debts, helping both partners avoid unexpected financial responsibilities.
4 – Protects Family Businesses and Aids Succession Planning
A prenup can help preserve the family business. It can protect ownership interests and aid long-term succession planning. A thoughtfully drafted agreement can even ensure that a non-working spouse has no ability to interfere with business operations upon relationship breakdown.
5 – A Prenup or Cohab Can Strengthen Your Estate Plan
A prenup or cohab agreement can work alongside your will and other estate planning documents. Clearly identifying separate property and confirming each party’s intentions helps ensure children and other intended beneficiaries receive the assets you want them to inherit, while reducing the risk of disputes or claims by a surviving spouse.
6 – A Prenup May Provide Additional Certainty Regarding Spousal Support
Although spousal support cannot always be determined in advance, some agreements include terms addressing how support may be handled if the relationship ends. Whether those provisions will be enforced depends on the circumstances at the time of separation and whether the agreement remains fair.
7 – Reduces Legal Costs and Conflict
If separation occurs, a prenup significantly reduces the time and expense associated with resolving the issues. Because many of the key terms have already been negotiated, parties will almost certainly avoid Court and move forward with their lives quickly.
8 – Prevents Emotionally Charged Decision-Making During Separation
Separation is often accompanied by heightened emotions. A prenup allows important financial decisions to be made while the relationship is healthy rather than during a conflict. This can reduce pressure on both spouses and help promote a fair and mutually beneficial outcome.
9 – A Prenup Can Simplify Leaving an Unhappy Marriage
Financial uncertainty can sometimes prevent individuals from leaving relationships that are no longer working. By establishing expectations in advance, a prenup can provide both spouses with greater certainty regarding their financial future and make the process of separation less overwhelming.
Hayes Fry Law Prenup or Cohab Process:
- You’ll have a consultation with one of our senior family lawyers
- The lawyer will explain how the law operates and how it might impact you, you will explain what it is you want to protect and any other issue of concern.
- You will provide information that verifies your income, debts, and the kind and value of your property.
- The lawyer will prepare and send you a draft agreement, which is finalized after your review.
- Your spouse meets with a lawyer to review the agreement, and sign.
- You meet with your lawyer to complete signing of the agreement, after which you and your spouse, and both lawyers, retain a copy. On average, the total cost is $3,000.00.
If you are considering creating a prenuptial agreement, our family law team is here to help. Managing Partner and family lawyer Nathan Hayes-Fry has over 12 years of experience resolving family matters and, when it comes to prenuptial agreements, will ensure your interests are protected. Contact us today for more information on prenuptial or cohabitation agreements.
Related:
Cohabitation Agreements: Why you should have one
The benefits of having a prenuptial agreement