So you’ve finally found the love of your life and you’re ready to tie the knot, but what should you do before you say “I do?” A prenup.
What is a prenup?
We hear about it in celebrity gossip or even at the dinner table when someone has just gotten engaged, but we may not know exactly what it entails. One thing we do know, you should get one.
A “prenup” is referred to as a “marriage contract” in Canada. It is a legal document for individuals getting married to protect their finances and assets should their marriage dissolve. It can even include parenting arrangements for children, EXCEPT custody and child support.
Couples often don’t discuss prenups because simultaneously planning the beginning and end of your marriage is not pleasant.
If prenups cause so much distress, why would anyone want one? Because, unfortunately, divorce can happen. Statistics Canada states that 4 in 10 marriages end in divorce. In fact, finances are one of the top 10 reasons marriages dissolve.
Without a prenup in Ontario, the Family Law Act governs the division of your assets and finances, and the division may not be in your favour.
What will the Family Law Act do?
Subject to some exceptions, the Family Law Act provides a calculation that equalizes the net worth of each spouse as acquired during the marriage. The split is often fifty-fifty and may pose a problem for some spouses.
For example, imagine that you own a home prior to marriage, and upon marriage, you and your spouse decide to live there. Your home becomes the matrimonial home. This means, if the marriage ends, the Family Law Act may entitle your spouse to half of the property. With a prenup, you can determine the property distribution.
Further, consider if your spouse has an enormous debt. Upon the dissolution of marriage, the Family Law Act would allow them deduct it and significantly reduce their net family property. Again, with a prenup, you can state how your debt would be apportioned.
These are just some examples, but is a prenup right for you?
- There is a significant difference in your assets or debt
- Even if you have little to no assets at the time of marriage, it is still important to get a prenup as your income and assets can grow while you are married
- You are receiving a home as an inheritance and you will be living in it during the marriage
- You want to protect your business
- You want to avoid extending court involvement
- You have children and want to make a smooth transition for the future
- You have children and want to protect assets you have for them
A prenup is a secure financial planning option, but the conversation of a prenup can be difficult. We, at A. Princewill Law Firm as your family law lawyers, can help you and your partner understand how a prenup protects your interests, while you still prepare for a beautiful future together. Contact us today!