For couples entering marriage with children or assets
A prenuptial agreement is a legally binding agreement created by two people before marriage. It is commonly abbreviated as “prenup.” A prenuptial agreement is intended for couples who have pre-marriage assets and/or debts and want to set out in advance what will happen if there is a breakdown of the marriage. The content of these agreements varies greatly. However, the most common provisions include the division of property and spousal support.
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Essentially there is no one law either provincially or federally that governs the drafting of a prenup. The execution of the prenuptial agreement is done with a lawyer in your province, and it is the lawyer’s job to ensure it is drafted to stand up in the federal and provincial jurisdictions. The agreement itself will address topics that are covered by both the federal divorce act and provincial family law acts and therefore it should stand up to the scrutiny of opposition if there is any dispute. Given the recent increase in the number of these agreements, it is important that if you and your future spouse are well educated about the implications and issues that can arise. If for example, you agree to put something in the agreement that directly conflicts with what the family property laws would say in the case of a marriage breakdown, you need to be extra clear and detailed. Further, you have drafted something that is clearly way out of the norm, is vague or is missing something, then your agreement or part of it may be at risk.
Ensuring that your agreement is executed correctly is crucial in protecting its intentions if ever challenged. Getting independent legal advice and having a lawyer execute the agreement is important. The terms and agreements reached, however, are better done in the context of a neutral mediated or negotiated process so that each party’s wishes and goals are accomplished, at the same time protecting the well-being of the relationship. It is best to draft the content of the agreement with a neutral third party and then use a lawyer to draft the final legal agreement. Lawyers can make these negotiations adversarial, even it not intentional, therefore using a neutral third party is preferred.
Fairway Divorce Solutions has a step by step mediation process that is designed to assist couples in the discussion, negotiating and agreeing on the terms set out in the agreement. The process protects the integrity and relationship of the parties while ensuring that the agreement is thorough and addresses all the issues that are relevant. Being an empowered, educated decision maker is fundamental to a strong and healthy future marriage.
The content of a prenup may vary significantly, and while it is like a cohabitation agreement in the areas it covers, it is strictly drafted prior to marriage to address what will happen in the case of a marriage breakdown. The agreement specifically sets out the details with regards to division of property and in many cases, spousal support. Normally issues around parenting and child support are not found in these agreements as the terms with regards to parenting are always negotiable depending on what is in the best interest of the children at the time. In the prenuptial agreement, the party bringing more assets to the marriage is likely setting out terms with regards to how he/she may protect them in the case of a divorce. The more detailed and specific the agreement is, the more likely it will stand up under the scrutiny of a lawyer at the time of a marriage ending. The idea is to reduce the chances of conflict around interpretation if the agreement ever needs to be relied upon.
Some additional areas that can be addressed in the prenuptial agreement include; what will happen in the case of death or disability. In this way, a prenuptial need not be sided in favour of the one with a higher net worth but can also protect the other spouse ensuring that they are protected as well.
Prenuptial agreements are becoming more and more common, especially considering second or third marriages, where there may be significant assets and/or children from previous marriages. However, there is not a yes or no answer to this question. It is a matter of personal choice, and there are strong opinions both in support of these kinds of agreements and opposed. Either way, if you want to ensure that there is no confusion or blurred lines between pre-and post-marriage assets, then negotiating and signing a prenup could be wise. If done correctly, it will protect both parties and give you both peace of mind.
A prenup agreement is usually entered before getting married. A cohabitation agreement is used by two people wanting to live together in common law for an extended time without getting married. Both contracts are designed to set out the agreement with regards to property, investments, general assets, debt, spousal support and sometimes children. They allow each individual to determine in advance, who will keep certain assets and what will happen to property or investments that have been purchased during their relationship. The intention of both agreements is to bind the parties.
Bottom line, with kid gloves. While many people will agree it is a wise decision to have one, there are still many who will refuse to sign a prenuptial agreement. Unfortunately, this fear-based opinion is a result of many pre-nuptials gone wrong and legal negotiation battles that use pressure tactics unfairly.
For those of you being asked to sign one, you will need to ensure you are completely comfortable with the decisions and terms within the document. Soliciting the services of the third party, like Fairway, could help answer any questions you have in regards to the contents of the prenuptial agreement.
While the thought of addressing the subject can be stressful, if you deal with each of the issues in a methodical, kind-hearted, analytical way, the outcome can protect both parties from future legal issues.
For example, consider the case where there are children from a previous marriage. The new spouse can include plans in case of death or divorce and set the terms to protect all parties, including the children, fairly. If done properly, the prenuptial agreement will create equal footing with the balance of power around money from day one. The key ingredient is a good decision-making process, with everyone’s concerns addressed within the prenup agreement. Ideally, it needs to benefit both people entering into marriage in some form or another.
Given the sensitivity and risk of these conversations, the Mediators / Resolution Experts at Fairway, take extra care and apply specific skills to ensure that the process of making decisions is both thorough and detailed resulting in a fair agreement that lays the foundation for a great life together. While some think, a prenuptial is only to protect the person with pre-marriage assets, at Fairway we focus on a win-win, giving both parties peace of mind. We address the outcomes in the case of divorce, death, and disability ensuring a fair outcome for all interested parties.