Do I Need a Prenup?
Do you own a home? Is your spouse moving in?
If you are getting married, this home will become the matrimonial home that is treated differently under the law. If you would like acknowledgement for the funds you came into the marriage with that are in the home, you need an agreement that says if this is the same house you are living in at date of separation that you get the date of marriage deduction for it. Essentially, the contract would provide for you to get back the funds you put into the property and only the growth would be shared. If you are common law, your spouse may claim an equitable interest in your home if they feel they have financially contributed, done work, assisted with the upkeep, etc. A contract can help define the terms of this property and what should happen upon separation to avoid expensive negotiations down the road and uncertainty.
Do you have children? Is this your second marriage?
Typically, if you have children and are entering your second marriage, you have amassed property. Often, the thought of sharing the growth at separation feels unfair, as it feels your property is going to your new spouse rather than your children. Often people would like a contract contemplating property division to ensure that the kids are considered in the division ahead of time.
Do you own a business?
Are you a business owner or have shares in a company? Any interest in a business is divisible with your spouse at your date of separation, if you are married. Sometimes, paying a spouse half the cost of a business means not being able to afford to keep your home, needing to transfer most of your other investments to your spouse and being left with only the value of your company, or in some cases, having your spouse own part of your business. Many business owners would like a contract contemplating how the business would be divided and valued at separation. Similarly, if you in a common-law relationship, your spouse may argue an equitable interest in your company for providing support to you in building it. Many business owners prefer to contemplate this in a contract ahead of time.
Do you own an asset that may grow substantially in a short period of time during the marriage?
Are you a shareholder in a company that could stand to appreciate very quickly in a short period of time? Would it feel inequitable to share the growth if you separated shortly after? In this case, many use a time-sensitive contract that may provide for how that asset is divided that is not strictly ‘in half’.
Are you already married and have inherited money that you will be putting into joint property?
Did you inherit money and you want to pay off your mortgage, buy a cottage or invest it in a joint account? Did a parent gift you money for a home that is going into both of your names? If so, this is a deemed gift to your spouse and upon separation you cannot claim a deduction from your net family property. Most people would like a contract providing for this exclusion.
Do you have family wealth?
Are your net worths so different that dividing up growth during the marriage seems unfair? Are you better to provide ahead of time for how your property ought to be divided and for spousal support now?
