Prenuptial Agreements (Prenups)
Given the high divorce rate, it is common—and often a good idea—to consider a Prenuptial Agreement before getting married. A Prenup can help you protect your property, your income, and save you time and money if the marriage breaks down.
What is a Prenuptial Agreement?
A Prenuptial Agreement is a contract between two people who intend on getting married. It determines what rights each spouse has should the marriage break down and the spouses separate. For example, a prenup will typically say “who gets what”. A Prenup can help you protect your property, your income, and save you time and money if the marriage breaks down.
Prenups are in writing, and both parties must obtain independent legal advice to be binding and enforceable in court.
Prenuptial Agreements are subject to the same rules are other contracts. For example, people entering into one must:
- Be of sound mind.
- Understand the terms of the agreement.
- Enter into the contract voluntarily.
What are the Benefits of Prenup?
There are many reasons to sign a Prenuptial Agreement in Alberta:
- Prenups Save Time & Money -Approximately 40% of marriages end in divorce in Canada. You do not want to be a statistic. Having a Prenuptial Agreement in place will help to “fix” the rights of the spouses in case the marriage breaks down. This will save everyone the time, emotional energy, and legal fees associated with litigation.
- Prenups Provide Flexibility & Certainty – A Prenuptial Agreement allows spouses to create their own settlement so that they get to choose the terms of their separation (God forbid). Without a Prenuptial Agreement, you may be leaving your future in the hands of the court.
- Prenups Protect Family Property – A Prenuptial Agreement can help you protect your family assets from being divided between you and your (ex) spouse. This is especially important if you have your own business, are involved in a venture with friends or family members (like a family business or family farm), or expect to inherit an asset that you expect might grow in value over time (grandpa’s wine collection, the family home). You do not want to gamble your—or your extended family’s—future.
- Prenups Protect Your Income– Often, Prenuptial Agreements will deal with the issue of spousal support. If you do not have a Prenup, then you could be on the hook for spousal support in the even of a separation—especially if you make good money.
- This is Not a First Marriage – If you were previously divorced, you will likely be more realistic and practical about entering into another marriage. A Prenup can help save you some of the pains and costs associated with a divorce.
What Goes in a Prenup?
Prenuptial Agreements typically deal with the following issues:
- Parenting – Often when spouses have children from prior relationships, they will want to “fix” their parenting rights and responsibilities for those children, should their new marriage break down. This can be a way of providing stability for the children of the parent’s previous relationship. Occasionally, would-be spouses will also try to negotiate parenting arrangements for the children which they have together.It is important to remember that no matter what a prenuptial agreement may say about parenting, the court has the final say, and will consider only the children’s best interests in making its decision. Therefore, parenting clauses in a prenup may not always be enforceable.Generally, parenting clauses respecting children from prior relationships are more likely to be enforced than those dealing with the shared children. Agreements reflecting future children are not enforceable.
- Child Support – Spouses may include clauses which attempt to “fix” the amount of child support that the parents would have to pay after separation. Such child support clauses may be enforceable provided that they adequately provide for the children of the marriage.
- Spousal Support – Spousal support is usually included in Prenuptial Agreements. Spouses can either waive their rights to spousal support, or agree to the amount/duration of spousal support in advance. This provides them with certainty should the marriage end. Courts have typically upheld spousal support agreements.
- Family Property – Couples typically decide how they will divide the family property in a Prenuptial Agreement. Often, couples will follow the broad-strokes of the Family Law Act, however, they will add additional protections in place respecting their property.For example, a spouse may want to protect the increase in value of their stocks, or they may want to preserve their interest in their corporation. Courts have typically upheld family property agreements, provided they follow the legislation’s guidelines.
Although no Prenuptial Agreement is “bulletproof”, spouses can make their agreements stronger by obtaining independent legal advice from a lawyer, and exchanging comprehensive financial information, before signing the Prenup.
Do I Need a Prenup?
We recommend that all prospective spouses sign a prenup before marriage. However, there are certain people who have far more to lose by failing to sign a prenup. You should sign a prenup if:
- You own a business—including businesses that are sole proprietorships, partnerships, or corporations.
- You own a house.
- You have a pension or significant RRSPs.
- You own more than $100,000 worth of assets prior to the marriage.
- This is not your first marriage, especially if you have children from a prior relationship.
- You own intellectual property, for example, you are a published author or own rights which could generate royalties.
- Your spouse is bringing significant debts into the marriage that you don’t want to end up taking on if the marriage dissolves, for example, your spouse has significant student loans or is going through a consumer proposal/bankruptcy.
- You own a farm.
- You have inherited property and wish to safeguard this inheritance.
- You own jointly own property with your family or business partners.
Do I Need to See a Lawyer for a Prenuptial Agreement?
In Alberta, a contract dealing with the division of family property is not enforceable unless both spouses have had independent legal advice, pursuant to Section 38 of the Family Property Act. Because of this, it is very important to talk to a lawyer before signing a Prenuptial Agreement—or any other family agreement.
A family lawyer will be able to explain your rights and responsibilities under the agreement, as well as the legal risks involved. A lawyer will also be able to provide you with an objective legal opinion, which can make all the difference during an emotionally-charged breakup,.
Contact a Lawyer About a Prenuptial Agreement
We hope you found this legal information respecting prenuptial agreements helpful. Feel free to call us at Morrison LLP at 587-758-1099 if you have any questions about your prenuptial agreement—the first 30 minutes are free. We can draft the agreement itself, or provide you with independent legal advice if the agreement has already been prepared.
Although we are based in Edmonton, our family & divorce lawyers—and practicing mediators—are proud to serve much of northern Alberta, including the following communities:
- Edmonton & Area – Sherwood Park, Beaumont, Leduc, Fort Saskatchewan, St. Albert, Spruce Grove, Stony Plain.
- North – Athabasca, Morinville, Westlock, Gibbons, Barrhead, Redwater, Peace River, High Level, Fort McMurray.
- West – Drayton Valley, Edson, Hinton, Whitecourt, Devon.
- South – Camrose, Wetaskiwin, Millet, Calmar.
- East – Vegreville, St. Paul, Cold Lake, Bonnyville, Vermillion, Wainwright, Tofield.