Glossary and Definitions
Prenuptial Agreement (Canada)
A Prenuptial Agreement (which may also be called a Cohabitation Agreement or Common-Law Partnership Agreement if the partners are not getting married) is a type of legal document entered into by two people prior to marriage or another form of civil union. Basically, the document lists the assets of each party, and outlines which party should get what in the event of separation or death.
Although Prenuptial Agreements have been traditionally thought to be geared for wealthy people, more and more people of all income levels are deciding that a Prenuptial Agreement is a good idea. Having a Prenuptial Agreement may be useful if one or more of the following applies to you:
- One partner is wealthier than the other
- You have assets such as a home, retirement fund, or stocks
- You have children or grandchildren from a previous marriage; or, you have other elderly loved ones to care for
- You may receive an inheritance
- You own part or all of a business; or, your business may grow substantially in the future; or, one partner is pursuing a lucrative career
If a Prenuptial Agreement is something that you and your partner may be interested in, be sure to talk to each other well in advance of an engagement or marriage. Try to outline in a general way what each party's assets are, and the general terms that you would like the contract to have. Keep in mind that, if the parties do not fully and honestly disclose their assets, the agreement may not hold up in court. Next, each party should hire a separate lawyer so that the lawyers can cooperate to write the final contract. There are also a number of excellent template agreements available online for those wishing to save on the cost of a lawyer's fees. Once written, the contract should be signed well before the wedding date to avoid any impression that one party may be coerced by the other. The agreement should be updated every few years after signing, to reflect changes in income or changes in the amount that you wish to give your spouse. Also, some Prenuptial Agreements include a "sunset clause" which means that the agreement is only in effect for a certain number of years into the marriage.
People living in the states of Arizona, Idaho, Louisiana, California, New Mexico, Nevada, Texas, Washington, or Wisconsin should be aware that their state laws force property accumulated during a marriage to be equally divided between the parties. Other factors that various states may consider important when judging the final distribution of assets include how long the marriage lasted, whether there are children, and the age, employment skills, health, and other attributes of each partner. For further information on how these specific factors may influence the outcome of your agreement, you may wish to contact a lawyer in your jurisdiction.