Marriage and cohabitation agreements, also known as prenuptial agreements, are generally prepared when spouses and common law partners wish to take themselves out of the rules set out in the B.C. Family Law Act. The rules set out in the Family Law Act dictate an equal division of all real and personal property other than “excluded property”. A couple may want to opt-out of this regime in situations where one party is bringing significant assets into the relationship, one or both parties have children from a previous relation, one party owns a business, or each party wants to remain financially independent.
There are many reasons why couples enter into marriage and cohabitation agreements. One or both parties may want to protect assets acquired before the relationship began or preserve certain assets with sentimental value from being shared with the other party. Other parties may want separate and joint assets during the relationship. Couples may also want to address spousal support issues through an agreement in cases where both parties are well-established in their careers. They may also wish to set out how each would contribute to the shared expenses and assets in situations where they choose to maintain separate financial affairs during their relationship.
Court will generally uphold agreements between parties and not set them aside provided that certain steps have been taken before and during the preparation of the agreement. First, the parties must make full disclosure of their financial situation and assets. Second, both parties must be free from duress or pressure to sign the agreement. Third, the provisions in the agreement must not be significantly unfair to either party. The final consideration is each party must have their own lawyer who can provide them with legal advice independent from each other.
Having an agreement in place at the beginning of a relationship can help reduce the expense, uncertainty, and stress involved with any family law problems that may occur in the future.