Prenups: Protect Your Assets Before Marriage

When it comes to marriage, no one wants to think about the possibility of divorce. But the reality is, it happens. That's why a prenuptial agreement can be such a crucial part of your estate planning. In this article, we'll explore the benefits of a prenup and how it can help protect your assets, even if you never need to use it.

• What is a Prenup?
• Why Get a Prenup?
• What Can Be Included in a Prenup?
• How to Create a Prenup
• Prenup Myths Debunked
• When to Get a Prenup
• Working with a Lawyer
• FAQs

What is a Prenup?

A prenuptial agreement, also known as a prenup or antenuptial agreement, is a legal contract that couples enter into before getting married. It outlines how assets and liabilities will be divided in the event of a divorce or the death of one spouse. Essentially, a prenup allows you to have a say in how your property and finances will be handled, rather than leaving it up to the courts.

Well, here's the thing - a prenup isn't just for the wealthy or famous. In fact, anyone who has assets they want to protect should consider getting one. It's a common misconception that prenups are only for the rich and famous, but that's simply not the case. Prenups can be beneficial for people of all income levels, especially if you own a business, have significant savings, or want to protect an inheritance.

Why Get a Prenup?

There are several reasons why getting a prenuptial agreement can be a smart move, even if you and your partner can't imagine ever getting divorced. First and foremost, a prenup can help protect your assets and ensure that they are divided fairly in the event of a separation or divorce. This is especially important if you have significant assets, such as a family business, real estate, or investments, that you want to keep separate from the marriage.

Additionally, a prenup can help you and your partner have open and honest conversations about your financial expectations and goals for the marriage. This can be a valuable exercise that helps you both get on the same page and avoid potential conflicts down the road. It can also provide clarity and certainty, which can be especially important if one partner has significantly more assets or income than the other.

Ultimately, a prenup is about protecting yourself and your loved ones, not just in the event of a divorce, but throughout your marriage.

What Can Be Included in a Prenup?

A prenuptial agreement can cover a wide range of topics, from asset division to spousal support. Some common things that can be included in a prenup are:

• Division of assets and liabilities, including real estate, investments, and personal property
• Spousal support (alimony) provisions, including the amount and duration of payments
• Ownership and management of a family business or professional practice
• Provisions for the division of debt, such as credit card balances or student loans
• Inheritance and property rights, including any assets that are to remain separate property
• Provisions for the distribution of assets in the event of death or disability
• Childcare and child support arrangements (though these may be subject to court approval)

It's important to note that certain things, such as child custody and child support, cannot be included in a prenup, as these are considered matters of public policy that the courts have the final say on.

How to Create a Prenup

Creating a prenuptial agreement is a collaborative process that typically involves both partners and their respective lawyers. Here's a general overview of the steps involved:

1. Disclose financial information: Both partners must fully disclose their assets, liabilities, and financial situation to ensure the prenup is fair and equitable.
2. Negotiate the terms: The partners, along with their lawyers, will negotiate the terms of the prenup, including asset division, spousal support, and any other provisions.
3. Draft the agreement: Once the terms have been agreed upon, the prenup will be drafted by the lawyers. This ensures that the agreement is legally binding and enforceable.
4. Review and sign: Both partners should carefully review the prenup and seek independent legal advice before signing the agreement.

It's important to note that the prenup must be signed well before the wedding date, usually at least 30 days in advance, to ensure it is valid and enforceable.

Prenup Myths Debunked

There are a lot of misconceptions and myths surrounding prenuptial agreements. Let's take a look at some of the most common ones and set the record straight:

1. Myth: Prenups are only for the wealthy. As we mentioned earlier, prenups can be beneficial for people of all income levels, not just the rich and famous.
2. Myth: Prenups are unromantic. Having open and honest conversations about finances and asset protection can actually strengthen a relationship by building trust and ensuring you're on the same page.
3. Myth: Prenups are always upheld by the courts. While prenups are generally enforceable in Ontario, they can be challenged if they are found to be unfair or if there was undue influence or coercion involved in the signing.
4. Myth: Prenups can't be changed. Prenups can be modified or even revoked, but it's important to do so with the help of a lawyer to ensure the changes are legally binding.
5. Myth: Prenups are only for couples who expect to get divorced. Prenups are not just for couples who are anticipating a divorce. They can also be important for estate planning and protecting assets in the event of a spouse's death.

When to Get a Prenup

The best time to get a prenuptial agreement is well before the wedding date, typically at least 30 days in advance. This gives both partners ample time to review the agreement, seek independent legal advice, and make any necessary changes.

That being said, there may be situations where a prenup is needed closer to the wedding date, such as if one partner owns a business or has significant assets they want to protect. In these cases, it's important to work with a lawyer to ensure the agreement is properly executed and enforceable.

Ultimately, the decision of when to get a prenup will depend on your unique circumstances and financial situation. The key is to start the conversation early and work with a qualified estate planning lawyer to ensure your interests are protected.

Working with a Lawyer

When it comes to creating a prenuptial agreement, it's essential to work with a qualified estate planning lawyer. A lawyer can help ensure that the agreement is legally binding and enforceable, and that it accurately reflects your wishes and protects your assets.

During the process, your lawyer will guide you through the following steps:

1. Gather financial information: Your lawyer will help you gather and organize all of your financial information, including assets, liabilities, income, and any other relevant details.
2. Discuss your goals and priorities: Your lawyer will work with you to understand your goals for the prenup and what you want to protect.
3. Draft the agreement: Your lawyer will draft the prenuptial agreement, ensuring that it complies with all applicable laws and regulations in Ontario.
4. Review and negotiate: Your lawyer will review the agreement with you, and they may also negotiate with your partner's lawyer to ensure a fair and equitable outcome.
5. Finalize and execute: Once both parties are satisfied with the agreement, your lawyer will finalize the document and ensure that it is properly executed.

Working with a lawyer is essential to ensure that your prenuptial agreement is legally binding and enforceable. They can also provide valuable guidance and support throughout the process, helping you navigate any challenges or questions that may arise.

FAQs

Do I need a prenup if I don't have a lot of assets?

Even if you don't have significant assets, a prenuptial agreement can still be beneficial. It can help protect you from taking on your partner's debts, ensure that any inheritances or gifts remain separate property, and provide clarity around financial expectations and responsibilities during the marriage.

Can a prenup be changed or revoked after the marriage?

Yes, a prenuptial agreement can be modified or revoked after the marriage, but it's important to do so with the help of a lawyer. The process of changing a prenup is typically more complex than creating the original agreement, so it's best to work with a qualified estate planning attorney.

What happens if one partner doesn't disclose all their assets?

If one partner fails to fully disclose their assets during the prenup process, the agreement may be deemed invalid or unenforceable. Hiding assets is considered a form of fraud and can seriously undermine the validity of the prenup. It's crucial that both partners are completely transparent about their financial situation.

Can a prenup include provisions for child custody and support?

No, a prenuptial agreement cannot include provisions for child custody or child support. These matters are considered issues of public policy and are ultimately decided by the courts, based on the best interests of the child. A prenup can, however, include provisions for spousal support.

Do I need a prenup if I'm not wealthy?

Absolutely! Prenuptial agreements aren't just for the wealthy. In fact, they can be beneficial for people of all income levels, especially if you own a business, have significant savings, or want to protect an inheritance. A prenup can help ensure that your assets are divided fairly in the event of a divorce, regardless of your net worth.