Understanding prenuptial contracts before your Alberta marriage
Prenuptial agreements no longer hold the same stigma they may have in the past.
Prenuptial agreements are entered between two people who plan to cohabit and/or marry. This type of marriage contract puts into place terms controlling how certain legal issues will be resolved should the relationship end or at the death of one of the partners. Prenups usually involve the splitting or disposition of money, personal property, investments, real estate and debt.
Often in second or subsequent marriages, one spouse wants to see that property at death go to his or her children from a previous relationship, instead of to the second spouse or that person’s children.
According to an article in Global News, younger adults are tending to request prenups more often than older people anticipating marriage.
There is a misconception that prenuptial agreements are only for people of wealth, but that is not true. In fact, the disposition of money and property in a relationship of average or little wealth may be even more important to the parties’ long-term well-being.
Sometimes, a person may be concerned that if they bring up the topic of a prenup, it could offend his or her partner. While that may be understandable, having discussions about financial matters can strengthen the partnership and avoid surprises later. It is smart to have an agreement in place.
For example, a person may have an interest in a family business that he or she wants to keep completely within the family of origin. A term of a prenuptial contract could be that the future partner waives any right to ownership in or control of that business during or after the relationship or at the death of the partner with the family business interest.
Another scenario might be that one party tends to make purchases using credit more freely than the other. They could include a term that consumer debt taken out by each party will remain with that party if the relationship ends.
Some other potential topics to deal with in an Alberta prenuptial agreement include:
- Use of income during marriage
- Responsibility for expenses and debt
- Bank and other accounts
- Stocks, bonds and other investments
- And others
Each party must have his or her own lawyer as they negotiate and execute a prenup.
A lawyer can provide detailed advice and insight into the pros and cons of various terms that could be part of the agreement. For example, the Family Property Act of Alberta governs property division upon termination of a relationship when the parties cannot settle these issues. In a prenup, the parties can change what the Act would otherwise provide, but it must be in writing and with full understanding.
This article is only an introduction to a complicated legal topic. Every individual should seek legal advice about a prenup issue.
The lawyers at Bruce & Birklein Law in Calgary, Alberta, negotiate, draft, review and advise clients about prenuptial contracts.