First comes love, then comes the prenuptial agreement, then comes marriage – When people think of prenuptial agreements they often think of “gold diggers” and cheaters but prenuptial agreements can benefit a variety of couples.
What is a prenuptial agreement?
A prenuptial agreement is a legally binding contract between a couple regarding their property before entering into marriage and property distribution upon divorce, separation and death. The agreement comes into power on the date the couple are married.
What can be included?
A prenuptial agreement allows the couple to assess the property brought into the marriage and what they’d like to take away following a divorce including: inherited property, what is individually/jointly owned, spousal support onuses, how property will be divided in the case of death or separation, and the right to dictate the education and moral upbringing of their children.
Although prenuptial agreements allow couples to incorporate almost anything, there are limitations including:
(a) custody of/ access to children;
(b) child support;
(c) clauses considered illegal or immoral;
(d) clauses relating to infidelity or fidelity;
(e) removing the other person from a matrimonial home (even if they do not own the home); and
(f) selling the home or mortgaging the home without your significant others permission (even if you own the home)
Void in court
- Signatures of witnesses. Oral agreements do not stand up in court; ensure witnesses sign off on the contract.
- Financial disclosure. Disclose all of your assets in detail, including how much is in your accounts. For instance, stating you have a RRSP without disclosing how much money is in the account may not hold up in court.
- Duress and coercion. All contracts resulting from duress and coercion are invalid; thus, do not force your spouse to sign the agreement.
- Gross injustice. When one spouse is left penniless while the other is exceptionally wealthy after a long term relationship comes to an end, the court may choose to make the contract void.
- Illegal clauses. As mentioned above, there are limitations to what can be included in the agreement. For instance, you cannot include clauses to punish immoral behavior such as adultery. This is significantly different from the U.S.A where you can outline ramifications for a cheating spouse.
Pros and Cons
Entering into a prenuptial agreement can have its pros and cons. For example, it can protect you from accumulating your partners’ debt upon divorce. It is also viewed as practical and advisable in today’s world but it can also be viewed as unromantic and cynical. A prenuptial agreement can preserve family ties and ensure that your estate is handled the way you’d like after death. It can also serve as a safeguard for your personal and business assets. It also outlines financial expectations upon marriage and consequently it eliminates conflicts regarding asset and financial division upon divorce. Conversely, a prenuptial agreement can result in anger between partners and viewed as a lack of trust and commitment between partners.
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Point of discussion:
1. How do you feel about prenuptial agreements? Are they necessary?
2. What would you like included in your prenuptial agreement if you were to draft one?