A Prenuptial Agreement (“PreNup”) is one of the many types of domestic contracts that a couple can enter into. A PreNup is intended to fix and determine the status, ownership and division of all property now owned or acquired by the spouses prior to and during the marriage.
A PreNup may be similar to a Cohabitation Agreement. The main difference is that a PreNup is prepared in contemplation of marriage and a Cohabitation Agreement does not necessarily have to contemplate marriage.
Couples may have a difficult time bringing up a PreNup with their intended spouse. Your Calgary divorce lawyer or family lawyer can help you with this and explain that while you can hope for the best, you have to plan for every situation. PreNups also encourage spouses to have important discussions about their finances early on – something most couples ignore.
Ultimately, the decision of whether to get a PreNup is a personal one and will depend on the circumstances. However, having a discussion with a family lawyer or divorce lawyer can help you in making that decision.
PreNups Are Advantageous For The Following Reasons
- Certainty and Predictability – Spouses want the certainty and predictability of knowing how their assets will be dealt with in the event of separation, divorce or death. Having an enforceable PreNup allows for this.
- Fair Asset Distribution – Spouses enter into marriages with various net worth and various types of assets. Individuals are delaying early marriages, pursuing their careers and acquiring their own individual net worth base before entering into a marriage. Where one spouse has worked tirelessly to build their own individual net worth, without contribution from their intended spouse, it may be fair to keep a part or the whole of that asset acquired prior to marriage, and any increase in value subsequent to marriage, exempt from future distribution.
- Cost-Benefit Analysis – Separation and Divorce can be costly. If the parties cannot amicably come to an agreement on the division of their matrimonial assets after separation, litigation can be costly – both financially and emotionally. Having an enforceable PreNup allow separated spouses to move forward in a more cost-effective way.
- Maintaining Exemption on Exempt Property – Certain types of property may already be exempt by legislation. For example, property acquired prior to the marriage (or relationship) and inheritance are already exempt. However, when spouses co-mingle that with other matrimonial property, or when spouses put those exempt property into joint names, they risk losing part or the whole of the exemption. As well, an increase in the value of exempt property during the marriage count as matrimonial property. Having an enforceable PreNup allows separated spouses to maintain their exemptions even if there is an increase in value or even if they are co-mingled.
- Other Considerations – One of the most common uses of PreNups is to keep businesses or corporations separate and apart from matrimonial property division. Like all other assets acquired during the course of a marriage, the value of a business or corporation, including the assets and share therein, may be considered matrimonial property. Businesses or Corporations may also be bound with their own internal agreements and often require or request that a spouse enter into a PreNup to separate and keep exempt their share of the business or corporation.
MM Law provides professional legal work for families who are seeking to address matrimonial property division. If you have any questions or comments regarding legal issues from family & divorce law, to residential real estate law and mediation, MM Law is here to help.
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