Many people think of marriage contracts – or prenuptial agreements – as juicy bits of gossip about the rich and famous.
In reality, though, the use of such agreements has risen dramatically in recent years by couples across the economic spectrum.
The increase in the use of prenups (marriage contracts) throughout North America was chronicled by a recent U.S. survey that showed a 62 percent jump in the number of marriage contracts. The trend is seen here in Canada as well.
Rather than sowing the seeds of doubt about the strength of a relationship, most couples who use a marriage contract say it provides them with a sense of security: a roadmap of sorts that leaves nothing to chance if the relationship sours or ends naturally.
When a Marriage Contract Makes Good Sense
Millennials lead the dramatic rise in the use of marriage contracts – those newlyweds between ages 18 to 35 – who are marrying later in life and want to protect their assets. There is, however, a host of other reasons for why a marriage contract makes perfect sense for couples of any age.
- You can ensure the concerns of your children from a previous marriage are protected. With a marriage contract, you can make sure that assets intended for your children are shielded in the event of a divorce.
- Your assets are protected if you’re remarrying. Your financial and legal situation is likely different than your first marriage. For example, you may have children; own a residence and other assets of significance. A marriage contract can ensure the distribution of assets as you wish if there’s a divorce or death of either spouse.
- Protection of property owned before the marriage. Things can get sticky when it comes to how the matrimonial home is divided after a separation. Without a marriage contract, you will have to share the value of the home with your spouse– even if the house or property is solely in your name and even if you owned it prior to the marriage. By having a marriage contract, you can establish how the value of the matrimonial home will be shared, if at all.
- Retirement planning. Even for the most frugal among us, divorce has the potential to be financially devastating. Remember, anything of value (stocks, property, etc.) you acquire during your marriage is subject to being distributed equally with your spouse if you divorce.With a marriage contract, though, you can specify which assets will be split and equalized in the event of a separation and which will be excluded. Remember, a marriage contract not only protects the assets an individual has going into a marriage, it can also protect assets a person might acquire during the marriage. A marriage contract can also lay down the ground rules for concerns like spousal support, which is just one reason why many individuals are considering marriage contracts these days.
How about common-law spouses? How do Cohabitation Agreement Works?
Similar to a marriage contract, a cohabitation agreement spells out how common-law partners will treat issues like debts, property division and spousal support.
These agreements are automatically rolled over into a marriage contract if the couple later marry.
The Key Takeaway
The purpose of a marriage contract is not to court disaster for your marriage. Instead, it’s to give you and your spouse a sense of security in an uncertain world.
We realize that even broaching the subject of a marriage contract with your spouse or partner can be intimidating. An accredited family law mediator is especially helpful during the negotiation and discussion phases. They can often resolve issues quickly and at reasonable cost. A mediator is trained to help both parties reach an agreement without taking sides and can help both parties see things from the other’s viewpoint.
If you are unclear whether you need a marriage contract or for help with any questions relating to marriage contracts, get in touch with me, Darlene Rites, at Ferreira & Bettencourt, LLP. You can reach me by phone at (416) 536-4445 or via email firstname.lastname@example.org