Marriage Agreements – What You Need To KnowMay 16 2017
What is a marriage agreement?
Previously called a pre-nuptial agreement, a marriage agreement is a signed agreement between a couple that lays out their plans for the division of property, and other issues, in the event of their break-up. A marriage agreement can be completed by a couple before they begin to live together, before marriage, or after their marriage.
How is property defined?
Under provincial laws, property is everything a person owns or has in his/her name, or has an interest it. It is not just land or real estate. It can include bank accounts, investments, RRSPs, pensions (including CPP), even an interest in a trust.
What happens when you separate?
If a couple separate and they don’t have a valid marriage agreement, BC’s Family Law Act, requires that there be a 50/50 split of the increase in value of property that was brought into the relationship as well as a 50/50 split of all property acquired together during the course of their relationship.
Why should you get a marriage agreement?
One of the main benefits of having a marriage agreement in place is that it lets couples determine for themselves – rather than the courts – how they want their property handled in the event of a separation. This means they get legal advice at the beginning of a relationship on how best to manage their property and any potential exclusions.
Many couples don’t realize that if one partner transfers existing property currently under his/her name to a spouse, he/she can lose the ability to exclude that property from the division of property. Previous court decisions have determined that once a property is transferred into joint names, it may be considered “gifted” and the entire value of it is to be split equally. With a marriage agreement, a couple can contract out of this and put their own arrangements in place.
It’s also important to ensure that a couple’s marriage agreement and their wills work together so that there are no conflicts if one of the spouses passes away during the relationship.
Should you get a marriage agreement if…
…you married later in life?
When spouses come into a relationship with either one or both of them having a significant amount of property already acquired, or one has more than the other, it’s important to get a marriage agreement in place. This allows both parties to talk freely and openly about how they’re going to manage their finances and their property during their relationship and what happens in the event that things don’t work out.
…you have a blended family?
It’s a good idea for blended families to have marriage agreements as it lets couples decide early on what happens to their assets. Doing this up-front is much easier than dealing with it after a separation as it can be considerably more complicated, especially when there are ex-spouses and/or adult children involved.
Separation can be an emotional and challenging time for both parties. Having a strong marriage agreement in place before it happens can address many concerns up front while saving both time and court costs. A qualified legal professional can assist you in preparing these legal documents while helping you navigate the complexities of family and property laws.