Debunking common myths about premarital agreements

Debunking common myths about premarital agreements

It’s true. Premarital or cohabitation agreements are not an easy topic to bring up with your partner, especially if you have recently been engaged and are soon looking forward to declaring your love for one other in front of all your family and friends.

Most people don’t like the idea of accounting for the possibility of a separation or divorce at the start of a new relationship or a marriage.  That’s understandable.  However, separation occurs when the parties choose to separate but also when one of the partners dies. Considering the statistics, there is a strong chance that a separation will occur at some point even prior to the death of one of you.    

For married couples in Ontario, the law provides that the value of all kinds of property that was acquired by a spouse during the marriage, and still exists at separation, must be divided equally. There are a few exceptions to this rule, which includes gifts or inheritances, but only if they did not contribute to the purchase of or a mortgage against a matrimonial home.

The rules regarding the division of property for unmarried spouses after separation is less clear but there can be obligations, whether intended or not.

The way that property is divided in the event of a divorce may not be ideal for you and your future spouse.  And if you are unmarried, you may not be happy with the way things are divided after a separation. Couples might choose to divide property and debt differently and the general laws set out for dividing assets don’t necessarily reflect those choices. The current legal system does not work for every couple. You wouldn’t play a game without knowing the rules…the same goes for a marriage or entering into a serious relationship.  It is important to think about creating a premarital or cohabitation agreement that works for both you and your spouse or partner, regardless of the stigma that surrounds these documents.

In addition to the property regime, there is also the issue of spousal support which is an obligation for married and unmarried spouses.  This is another reason to consider making an agreement with your spouse or partner.

Premarital or cohabitation agreement myths

There is a lot of stigma and many myths when it comes to premarital or cohabitation agreements. Movies often portray them as something that causes a lot of grief between a couple, especially if one person is using the agreement to protect his or her family fortune from a future spouse. There are many situations and ways in which premarital or cohabitation agreements can be beneficial, and they don’t have to cause a rift between you and your partner. Let’s look at some of the most common myths around premarital agreements and how to see at them in a different light.

Premarital or cohabitation agreements mean you don’t love your spouse and are planning on separating or getting a divorce

First of all, talking about money and planning for the future does not mean you don’t love your partner. In fact, being able to have these open and honest conversations about difficult topics can indicate that you truly love and trust each other. No couple plans for a separation or a divorce before they live together or marry (hopefully) but planning for “just in case” is always a good idea. You don’t plan to get in a car accident every time you drive to work but you still have car insurance. The same goes for a cohabiting relationship or a marriage. Hopefully you will have a happy relationship or marriage that lasts forever, but if something does go wrong you will be happy you planned for it.

Premarital or cohabitation agreements mean you only care about money

The fact is premarital or cohabitation agreements don’t have to be about money at all. It can be about what happens to that special family heirloom or the cottage that has been in your family for years. With premarital or cohabitation agreements you can be as specific or as broad as you want and avoid the one-size-fits all laws that govern divorcing couples that don’t have a premarital agreement or confusion for unmarried spouses that don’t have a cohabitation agreement.

Also, more and more millennials are asking lawyers to put together cohabitation agreements or premarital agreements that have nothing to do with stuff or money. It is purely so they will feel more comfortable opening up to their partner. This can govern everything from the custody of a pet to what can and can’t be shared online.

Premarital or cohabitation agreements pit one spouse against the other

A well orchestrated premarital or cohabitation agreement is just that, an agreement. The idea that it only benefits one spouse simply isn’t true. Yes, both of you need to know your rights under the law and under your agreement but that doesn’t mean you can’t create a document that benefits you both.

Many people also feel that premarital or cohabitation agreements only benefit the wealthier spouse. This is false as a premarital or cohabitation agreement that ignores the rights of one soon-to-be spouse is likely not enforceable.  Also, sometimes an agreement is made to protect the interests of a disadvantaged spouse. For a strong, secure agreement both spouses need to have legal representation which will help them negotiate terms that feel fair to them. Also, the signing of the premarital or cohabitation agreement must be completely voluntary and if there are signs that one spouse was forced to sign it under duress it may become invalid if it is ever challenged.

Premarital or cohabitation agreements are just for rich people

Yes, we hear about premarital or cohabitation agreements when it comes to the rich and famous, but they are beneficial for regular folk too. No matter how much money you have, the rules that govern division of property in Ontario do not necessarily reflect the decisions you make within your relationship or marriage. It can be argued that if you don’t have millions of dollars, four houses and six cars it is even more important where your money and assets end up.

Whether you are young and just starting out or entering a more mature relationship, educating yourself about the laws surrounding separation and divorce in Ontario is always a good idea. If for some reason they don’t match up with the way you want to do things in your relationship, a premarital or cohabitation agreement is a great way to get detailed about your wants and needs and make sure you both are protected in the event of separation or divorce.

If you are considering such an agreement, you can also reduce the possibility for conflict by choosing a consensual dispute resolution process, such as a collaborative process or co-operative negotiations. This will help you to discuss your concerns and consider possible options with your spouse or partner in order to come to an agreement that works for each of you and your family.

If you are thinking of cohabiting with a new partner or are getting married (or even if you are already in a relationship) and you wish to determine for yourselves what your obligations and entitlements will be if the relationship comes to an end, including upon the death of one of you, you should speak to an experienced Family Law lawyer about your options, which includes a solid premarital or cohabitation agreement.

About James Jeffcott

James ("Jim") Jeffcott is a partner at Low Murchison Radnoff LLP and a member of the firm’s Management Committee, practicing primarily in Family Law. He also assists clients with Wills and Estates, Business Law and Litigation. Jim is a trained Mediator and an advocate/practitioner of alternative dispute resolution methods, where possible. He is a founding member of Collaborative Practice Ottawa.