Many couples who are engaged to be married do not want to think about planning for the worst-case scenario. Indeed, while a pre-nup (also known as a pre-nuptial agreement, marriage agreement, or marriage contract) may not be the most romantic topic of conversation to have with the love of your life, the benefits of having a pre-nup should not be ignored.
This week we address and dispel some of the most common myths that surround pre-nups and shine a light on the significant advantages of having one in place.
1) Signing a pre-nup is asking for a divorce
By far one of the biggest myths around pre-nups is that having one with your spouse-to-be is an indication that one of the parties does not really want to get married, that the marriage is in trouble before it begins, or that a divorce is inevitable. However, this is not the case.
Instead, since a pre-nup requires the proactive outlining of a number of important details, it requires that a couple sit down and candidly discuss things like their finances and their expectations for the future. This can, in many cases, lead partners to learn much more about themselves and strengthen a relationship.
In addition, in the event that there is a divorce, parties may be happy that they discussed fundamentally important elements of their relationship when they were still level-headed and in a good place
2) Pre-nups are only for wealthy spouses
Most people associate pre-nups with celebrities or other high-profile and high-net worth individuals. While it is certainly especially important to have pre-nup in place if you have significant assets, pre-nups are a good idea for everyone who is planning to get married, regardless of their personal wealth.
Pre-nups can be used to define financial obligations that each partner has towards the other, and can also address things other than property and assets- things that are relevant to anyone in a long-term, committed relationship.
Ultimately, pre-nups can also make a separation or divorce much more straightforward, by laying out certain things in advance and eliminating potential time-consuming and costly disputes if a relationship does end.
Without a pre-nup, many important issues may end up being decided by a court, after long and expensive litigation, rather than being decided by the couple, in advance, when their relationship is still positive
3) Pre-nups can cover anything you want
Pre-nups can govern many other things outside of finances, but there are some limits on what can be included.
For instance, pre-nups can include details such as:
- Spousal support;
- Ownership and division of property (including the matrimonial home);
- Credit card and other debt;
- Life insurance;
- Pension plans;
- What will happen to pets;
- Responsibilities such as care for aging parents or other loved ones.
However, pre-nups cannot address:
- Custody of children;
- Access to children;
- Child support;
- Clauses that are unenforceable or illegal.
For instance, pre-nups cannot provisions such as the frequency that spouses will have sex, or clauses pertaining to fidelity (e.g. a clause stating that spousal support will be void if a spouse were to cheat). In most cases, such clauses would be invalidated by a court.
4) Pre-nups are only helpful if there is a divorce
While pre-nups do address what will happen in the event of the breakdown of a relationship, they can also be used to determine what will happen where one spouse pre-deceases the other.
Pre-nups can be used as a helpful reference for estate planning purposes, and can potentially mitigate during any future estate litigation
5) Pre-nups can wait
While it may be possible to wait until the last minute to sign a pre-nup, or even to sign one after you are married (sometimes called a post-nup), doing so is not advisable.
If there is ever a dispute over a pre-nup, one thing that can be used to invalidate it is evidence of coercion by one spouse over the other. Where one party can establish that he or she signed a pre-nup under pressure or duress, a court may deem the contract null and void. In situations where one spouse signs a pre-nup days or hours before a wedding, their potential argument for coercion or duress can be stronger than a spouse who agrees to and signs a pre-nup far in advance of a wedding.
Similarly, it is possible to sign a post-nup, however, the validity of such a contract can also be affected by timing. For instance, if you decide to sign an agreement with your spouse years into a marriage, after significant assets are acquired or your personal net-worth grows, the process will be much more complicated and lengthy than if an agreement were entered into before you married.
How Financial Litigation Can Help
It is always advisable to consult with a knowledgeable family lawyer before you enter into a prenuptial agreement with your partner, especially if you own a business, a practice (law, dental, accounting, etc.) or have other significant assets that you would like to protect in the event of separation or divorce.
Importantly, each spouse must obtain independent legal advice and consult with their own lawyer before finalizing any agreement with their partner.
At Financial Litigation, we offer strategic and proactive advice about prenuptial agreements to clients. We combine our deep knowledge of family law, with our experience in financial litigation to provide our clients with guidance that dives deep beyond the basics that many other family lawyers address. Our personalized advice that centres on the financial implications of marriage contracts helps clients with proactively managing and protecting their wealth. Call us at 416-769-4107 x1 or contact us online to make an appointment.