Prenuptial and cohabitation: the legal agreements couples might want to consider
A prenuptial and cohabitation agreements are meant to protect each of you while moving the relationship forward in a positive way. These are most common when the couple has significant assets (family or otherwise) and/or children from a previous marriage. For these discussions and decisions, Fairway's Divorce Resolution Mediator apply our proven step-by-step Independently Negotiated Resolution™ (INR™) process to guide you through your decisions with regards to what may happen in the case of a breakup, death or simply while cohabiting.
Following decision-making, the terms are captured into a legally binding contract.. Fairway is committed to ensuring that legal rights and mutual respect are the foundations for this legal agreement. We make sure you both get independent legal advice and understand the legal implications of the terms of the agreement before you sign. While many pre-nups have the reputation of getting overturned, it is our goal to ensure both parties feel fairly treated so in the event of a breakdown or death, overturning is less likely.
There is a flip side worthy of sharing. Many relationships end due to the lack of sensitivity or understanding of the emotional implications of requesting the signing of a prenup. While protecting one's assets coming into a relationship is understandable and prudent; it is more about how you do it vs doing it. The challenge is that you are entering into a long-term relationship with hopes and dreams. To some, that means "I am all in (money and all)," and to others, that means "I am all in, but I also need to protect the what-if scenario." Neither is right or wrong.
Pros and cons of signing a prenuptial
In the case of deciding to get a prenuptial agreement in Canada, there will be an automatic (whether admitted or not) underlying feeling of "you do not trust me," or "you are not 100% committed." The person requesting it is likely afraid to have the conversation, as they want to protect their net family property but are concerned that it might appear as though they don't trust the other spouse. Either scenario can be problematic. If the conversation and process are not handled with care, you risk laying a very negative foundation for your relationship, or worse, it ends before marriage. The key to success is ensuring that both parties feel respected, validated, and legally protected, and that the terms of the prenuptial agreement are fair and enforceable.
A fair prenuptial agreement considers assets acquired before and during the marriage.It will also address the division of assets, spousal support, and financial obligations given different timelines, such as 5, 10, 15 and 20-plus years. It may also address decisions in the event of death or disability. Clearly, the longer the relationship, the more co-mingled, and rightly so, your assets will become. Both parties must feel respected and comfortable expressing intentions during the negotiations. If one person signs a prenuptial or a cohabitation agreement to appease the one with a higher net worth, the outcome will likely be distrust and discord over time. At Fairway, we are advocates of happy marriages and long-term relationships, and we are both experienced and committed to working with you for a positive road ahead.
Pros and cons of not signing a prenuptial
While it is common to provoke negative feelings initially, there are upsides to having a prenup. It is often considered that the prenup is to protect the one with the large majority of assets; however, if a prenup is properly drafted, it should also protect the person with fewer assets. Often, in the case of divorce, the person with more assets has the upper hand with professionals and is perceived to have more power and influence due to the differences in money. A well-thought-out prenuptial should contemplate the best interest of both people, which means that the person with fewer assets needs to be protected by an appropriate share of the wealth and perhaps ongoing spousal support. When couples build a life together, they may find their roles shifting in response to shared priorities. For example, if one partner’s career is more demanding or involves travelling frequently, the other may need to make adjustments that can impact their own professional path.These kinds of sacrifices, and many more, are ultimately in the best interest of the relationship and the family but must be contemplated when determining the terms of the agreement. Fairway's Divorce Resolution Mediator will take the time to not only look at the assets today but also consider the plans for the future and set out different scenarios of support and division of assets based on the length of time you're together and if there are children involved. The Fairway Method™ using the INR™ process ensures that all questions are answered for both of you individually and separately so you feel cared for and protected in the agreement.
Cohabitation agreements: protecting unmarried couples in common-law relationships
A cohabitation agreement is a legally binding contract designed for unmarried couples living together in a common-law relationship or civil partnership.
A family lawyer may help draft a comprehensive legal document that outlines key financial and legal considerations for the couple. We highly recommend that before the terms are drafted into a legal contract, that the parties have come to agreement by mutual consent using a Fairway Divorce Mediator which includes defining property and assets brought into the relationship, determining how accumulated assets will be divided, and establishing guidelines for bank account management. The final agreement can also address spousal support obligations and, if applicable, arrangements for parenting and child custody.
Many cohabiting couples mistakenly assume they will receive the same legal protections as married spouses, but provincial laws vary, and the absence of a cohabitation agreement can lead to complex and costly financial disputes. Without a legally binding contract in place, partners may face legal uncertainty regarding the division of shared property and financial responsibilities in the event of a separation.
Postnuptial agreements: protecting your assets after marriage
A postnuptial agreement is similar to a prenuptial agreement, except it is created after marriage rather than before. This legally binding contract outlines how marital assets, financial obligations, and spousal support will be managed in the event of a separation or divorce.
Couples often consider a postnuptial contract when there is a significant change in their financial situation, such as receiving an inheritance, starting a business, or experiencing career growth. It also becomes relevant when partners want to clarify financial responsibilities and prevent potential disputes. For individuals who have been in a previous marriage or have children from another relationship, a postnuptial agreement can provide clarity on estate planning and inheritance decisions, ensuring that all financial matters are handled fairly and equitably, including shared assets. In some cases, couples facing marital difficulties use a postnuptial agreement as a tool to safeguard financial security while working toward rebuilding their relationship.
A postnuptial agreement lawyer or family lawyer plays a critical role in ensuring that the contract is fair, legally enforceable, and compliant with the Family Law Act, the Matrimonial Property Act, and other relevant legislation. Similar to a prenuptial agreement, a postnuptial agreement must be drafted with full financial disclosure, independent legal advice, and a clear understanding of each spouse’s rights and obligations.
At Fairway Divorce Solutions, we utilize a structured mediation process to facilitate fair and transparent discussions, helping couples draft agreements that protect both partners while minimizing the potential for future legal disputes. Our goal is to create agreements that not only safeguard financial security but also strengthen trust and understanding between spouses as they move forward together.
Fairway's financial mediators will get the job done while protecting your relationship
You want to be careful about who you hire to help you through this process. Getting the right fit is very important to protect your relationship's integrity. The professional must possess the skill set and ability to facilitate conversations and move relationships forward positively while facilitating honest and open communication. They also need to know the relevant laws and the implications if the relationship ends. Many times, prenuptials are overturned due to lack of diligence or neglect in the agreement. Knowledge and experience are essential for the success of these conversations and the agreement's outcome. At Fairway, we're committed to helping you both.
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SaskatoonFrequently asked questions
Cohabitation is a living arrangement when an unmarried couple lives with each other like a marriage. Cohabitation may create legal obligations between partners, including parenting, child and spousal support, and the division of assets.
The Divorce Act does not apply to couples who are not married. To fill in the gap for such cases, many of the provinces in Canada have provisions in their Property or Family Acts to cover the areas of guardianship, parenting time, child support and support for a common-law partner.
Dividing property between cohabiting couples is more difficult however some provinces have made the legal provisions like that of a marriage. In the regions that do not have Acts to cover cohabitation, then in the case of a relationship breakdown, you must rely on case law developed through years of litigation. Unfortunately, this is a murky area of law and litigation and lawyers can offer little certainty.
There is a trend in the provinces to align the laws around cohabitation with those of a marriage. In this regard many couples are selecting to deal with the issues in advance to avoid the potential high conflict if their relationship ends.
A cohabitation (cohab) agreement is a legally binding agreement that sets out important aspects of the relationship. These agreements have become much common in recent years because of changing marriage relationships.
A cohabitation agreement is a legally binding document, if it is executed properly. It should address areas where there could be a dispute when faced with a relationship breakdown.
A cohabitation agreement may include decisions about the terms when living together and what will occur in the case of a breakup. These agreements generally include terms that:
- Deal with the property each party brought into the relationship
- Set out how to divide accumulated assets
- Define how bank accounts will be kept
The Family Law Act governs parenting and spousal support; however, a cohabitation agreement can be used to document a couple’s intentions with respect to the following:
- The payment of spousal and child support
- Parenting arrangements for any children
- Each parties’ intentions toward children from previous relationships
There are numerous benefits to creating a cohabitation agreement. Upon breakdown of a relationship, a properly drafted cohabitation agreement helps reduce fighting, stress, emotional distress and legal fees. While most matrimonial laws set our property to be split 50/50, there are provisions in most provinces for pre-marriage assets and exemptions so you may be partly protected in this regard. If you want to be certain you're fully protected, a cohabitation agreement should be considered.
While you may feel you should have an agreement, approaching the subject with your partner can be a daunting task and if not handled with care may harm your relationship. We know that making a Cohabitation Agreement will be hard. It is difficult and emotionally taxing trying to decide how you would end your relationship while it is still going strong or before you take the exciting step of moving in together. Fairway Divorce Solutions’ negotiators use our step by step modified INR Process to facilitate these conversations so that you can lay the foundation for a great future versus injecting unnecessary stress and conflict in your relationship. A cohabitation agreement prepared by Fairway will give you the relief you want when entering this next phase of your life together and protect the relationship you are building.
A prenuptial agreement is a legally binding agreement created by two people before marriage. It is commonly abbreviated as “prenup.” The content of a prenup may vary significantly, and while it is like a cohabitation agreement in the areas it covers, it is strictly drafted prior to marriage to address what will happen in the case of a marriage breakdown. The agreement specifically sets out the details with regards to division of property and in many cases, spousal support. Normally issues around parenting and child support are not found in these agreements as the terms with regards to parenting are always negotiable depending on what is in the best interest of the children at the time. In the prenuptial agreement, the party bringing more assets to the marriage is likely setting out terms with regards to how he/she may protect them in the case of a divorce. The more detailed the agreement is, the more likely it will stand up under the scrutiny of a lawyer at the time of a marriage ending. The more specific it is, the better and reduces the chances of conflict around interpretation.
Prenup agreements are used to protect pre-marriages assets. It is a matter of personal choice, and there are strong opinions both in support of these kinds of agreements and opposed. If you want no confusion between pre-and post-marriage assets then a prenup could be wise.
Common law, otherwise referred to as Adult Interdependent Partners (AIP) are the terms used to define two people living together in a relationship of interdependence for a certain period.
When two people are living together and are considered common law, both parties should have a clear understanding of the expectations around money and children if the relationship should end. Having an agreement that sets out the decisions, will prevent legal issues after a breakup.
The rules in Canada have been changing so it is prudent to understand how the laws apply to your situation.
Fairway provides couples with the ease of mind when entering into an AIP by delivering a comprehensive Adult Interdependent Partnership Plan. We are trained to ask the difficult questions, so you have addressed the different scenarios.
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