Are Prenups Only for the Wealthy?
Prenuptial agreements or marriage contracts are something that most Canadians are only familiar with because they have seen them used as part of a plot on a television show or movie. And it is no surprise. According to a 2017 Ipsos survey, only about 8% of Canadians have one. In the US, the number is higher but it’s still not huge – only about 14% of Americans have a prenup.
Prenups have the reputation as being something that only wealthy people would want or need, but is this really true? In this article, we will look at some of the important facts about prenups and why it might make sense to have one even if you are not amongst Canada’s ultra rich.
What is a prenuptial agreement?
A prenuptial agreement or marriage contract is simply a legal document that outlines how assets are to be divided in the event of a marital breakdown. For this document to be valid, each party must have their own lawyer when it is drawn up. The marriage contract supersedes a will.
What protections are there without a prenup?
Even without a prenup, there are certain laws in place to protect couples’ assets in the event of a divorce. For example, the law already spells out that any assets you bring into a marriage are yours in the event of a divorce. Any assets that are accrued during the marriage however must be divided equally. The primary exception to this rule is the matrimonial home which is divided equally regardless of who owned it prior to the marriage.
So, who needs a prenup?
Wealthy families may want their children to get prenuptial agreements in order to protect the wealth that they have built up over the years, but wealthy families are not the only potential candidates for prenups. For example, if you have a business and the spouse has shares in that business, then a prenup can help to protect both the business and any partners in the event that the marriage breaks up.
A prenup can also protect family assets if there is going to be a large inheritance in the future. It can stipulate that money from an inheritance will go only to the beneficiary and not their spouse if there is a divorce.
Additionally, a prenup can be a good idea when there is a second marriage but there are children from the first. It can ensure that the new spouse doesn’t take assets that you would prefer to go to your children.
Talking to your children about getting a prenup
Talking to your children about getting a prenuptial agreement can be a contentious issue, because to them it may feel like a personal attack on their fiancé rather than that you are simply looking out for their best interests.
For this reason, it is best to approach this subject before they are in a serious relationship. An ideal time is when they are about to graduate from high school or about to start post-secondary school. This way, the conversation is simply in the context of “this is what our family does and why” rather than about a person that wish to marry.
Contact Fine and Associates today
Would you like to learn more about how a marriage contract could benefit you or a member of your family? Or would you like to start the process of drafting one? If so, contact Fine and Associates today to schedule a consultation.