In the earlier, only the wealthiest couples utilized prenups frequently. However, it is a depressing truth that almost half of all marriages end in divorce in Canada. This is the reason why it has gotten more and more typical over the previous few of decades. Even though we are confident that your marriage will be long, loving, and blissful, we nevertheless believe that it is crucial to discuss sensitive subjects like finance in order to secure both partners against unexpected future challenges. Prenups are a technique to reduce unnecessary risk associated with a variety of potential future financial and personal concerns.
But the most common question for a prenup in Canada: What happens if I sign a prenup and get divorced? Whether you are planning for a marriage or want a divorce ( hopefully not), this question might pop up in your mind. If so, you can find the answer in this article.
But, before that, let’s develop a basic understanding of the prenup:
What is Meant by a Prenup?
A prenup is a contractual document that enables committed couples to settle their finances and other non-financial issues before officially marrying each other. Also widely known as a prenuptial agreement or premarital contract.
In case of a divorce or a spouse’s death, this agreement plays quite a big role in specifying how the amounts of cash, assets, and debts will be distributed.
A prenuptial agreement can be modified at any moment throughout the marriage with the consent of both partners. However, this contract’s terms and conditions can be enforced per the state’s laws where the couple is currently living or has gotten married.
What is Covered by a Prenup?
There is no standardized format for a prenup. Instead, it varies from one couple to another as every agreement is custom-made by each couple in terms of their unique financial and personal circumstances.
However, the common things a prenup mostly covers include the following:
- Safeguarding the majority of your properties, including money, investments, real estate properties, savings, insurance, and upcoming inherited wealth.
- Protect the legacy and wealth of the children.
- Permit one party to keep and run the business whenever appropriate.
- Works as a shield against a spouse being held accountable for their partner’s liabilities and debts.
- Though spouses should have formal Wills, a prenup is useful because it specifies what will happen to life insurance policies and other varied properties in the event of an unexpected death.
- Sometimes genetic assets like frozen eggs, embryos, and sperm might be covered by a prenuptial agreement.
These are just some common instances; there is more to it. Such as, in this digital era, a couple can even incorporate clauses to forbid the usage of social media to publish rude, demeaning comments or share any personal information while a divorce occurs.
Therefore, make sure to take advice from an experienced divorce lawyer regarding the terms and conditions you can keep and cannot while making a prenup.
Who Should Get a Prenup in Canada?
Although marriage seems more like an emotional relationship, at the end of the day, it is also a legal document that brings together two people in a bond by law.
As a result, couples nowadays recognize the value of a prenuptial agreement as a fundamental tool. Thus they go for one to ensure their financial security. It also allows you to leave every crucial decision about asset distribution and financial futures to the court.
Now the question may arise, what criteria is prenup necessary? Well, everyone can get a prenup. It doesn’t matter whether you are rich or not.
However, there are some criteria for whom getting a prenup is better than leaving it for the future. Some of them are as follows:
- When one partner in a couple is much more invested, like entrepreneurship, involving both financial and non-financial goals.
- When one individual is the parent of a child from their past relationships, this agreement can ideally assist in defining and reserving the future rights of the children. (excluding child support)
- The couple has decided that one will leave a job for higher education or remain at home. This can be because of important reasons, such as helping their spouse with their career-related work, taking care of their children, or both.
- One person owes a lot of money in loans.
- The retirement funds of one spouse are estimated to be significantly bigger than the other.
- The couple can reside in a state where the division of marital property upon separation may only sometimes be just and reasonable.
Read Also: What Should a Woman Ask for in a Prenup?
What Happens If You Sign a Prenup and Get Divorced?
As mentioned above, a prenup is a legal document that is made and signed with the full consent of the engaged couple before the marriage. It can include financial assets to non-financials, business ownership, real estate, personal properties, pets, distribution of inherited wealth and assets to children, and genetic properties.
And once signed, you cannot modify it without the consent of the other parties and the court’s permission. So, analyze more, as these agreements are handy during a divorce or spouse death phase.
The clauses included in the prenup have to be abided by both partners. For any modifications, they will have to go to court and need to sort it out with a prenup lawyer‘s help.
Why is it so?
Well, it is because the couples made these prenup clauses by sitting together with their full consent. If they did have problems with them, they certainly would have a problem signing them. Besides, they have made this agreement to avoid the later hassles that may come with various situations and changes.
So, once you sign a prenup and get divorced, all the assets and financial divisions will be as per the agreement signed beforehand. As a prenup is a legal order, both you and your partner have to obey and respect the terms even after you are separated.
What are the Things That a Prenup Can’t Do?
Here is a list of the things that a prenup cannot do:
- Alimony is typically not covered in prenuptial contracts. However, some states permit renouncing the obligation to alimony as a condition of a prenuptial agreement.
- Prenuptial agreements cannot specify visitation rights in Canada, maintenance, or custody of the children.
- A prenuptial agreement can’t be used to specify reasons or requirements for separation, such as stating that if one spouse is addicted to drugs, the other partner is allowed to have an uncontested divorce.
- Prenuptial contracts typically exclude premarital assets, specifying that any assets a spouse has at the time of marriage shall be solely their possession.
What Happens If You Don’t Have a Prenup?
Prenuptial agreements let you set your own terms for your marriage and work around state law in the case of a divorce. As a result, your assets may be governed by your state’s divorce laws if you get divorced without a prenuptial agreement. Based on the following factors, the judge will determine who will be in charge of each specific asset:
- Income and potential for growth for you and your spouse
- Your property holdings and expected asset growth
- The lifestyle of the family
- The contributions of both spouses to the household, such as taking care of children, maintaining the property in order, making a living outside the home, and other things
- The expected financial requirements and obligations of both partners
- Pension amounts anticipated
- The paramount consideration should be the best interests of minor children.
You can specify which of your present and future assets are separate property and which are marital property in a prenuptial agreement. Any assets or funds that one party possessed prior to the marriage or that they would like to treat as separate, even though they were acquired during the marriage, are referred to as separate property. On the other hand, assets that both partners acquire during the marriage or assets they would like to be included in the marital estate are referred to as marital property.
There are two ways a divorce court will divide the marital estate if there is no prenuptial agreement. If you belong in a state that recognizes community property, assets accumulated during the marriage will often be divided equally, 50/50. The court will divide the property according to a number of parameters in a state that follows the equitable distribution principle.
A prenuptial agreement is a great way for committed couples to build the strongest possible base for their relationship and future children. As they ideally help to eliminate any major kinds of financial uncertainties in the future.
This, in turn, lessens the excessive and unwanted stress couples undergo while divorcing. But, to make the most of your prenup, make sure to put all the clauses under the direct supervision of an experienced Moose Jaw Divorce lawyer. So there is no scope for any mistakes or annulment.
Hopefully, you have no more queries regarding what happens if you sign a prenup and get divorced.
Frequently Asked Questions
Does a prenup cover child custody or child support?
No! A prenuptial agreement is restricted in what it can say, and some of these limitations include choices about child custody, child support, parenting time, and visiting rights.
What happens if you sign a prenup and your spouse dies?
In a prenuptial agreement, couples can specify what belongs to whom and what property rights each will hold in the event of the other’s death. The decisions made and consented to under a prenuptial agreement take precedence over the regulations intended to safeguard a surviving spouse.
Can a prenup be contested during a divorce?
Yes, you can challenge a prenuptial agreement. However, for a judge to take this into consideration, there must be good grounds.
Can anything invalidate a prenup in the course of a marriage?
You can have the prenuptial agreement invalidated if you can show that your spouse did not properly disclose all of their assets. For debt disclosure, the same holds true. You may be able to have the agreement declared invalid if you find out your spouse has more debt than was specified in the agreement.