Planning a wedding or deciding to build a life together is an exciting chapter. Amidst the joy and anticipation, bringing up a “prenup” – or Prenuptial Agreement – might feel like introducing a dose of uncomfortable formality. Many couples question if they really need one, especially if they aren’t entering the relationship with substantial individual wealth. So, let’s address the question directly: Are prenuptial agreements important in British Columbia? In short, yes, they are highly valuable planning tools.
While the term “prenup” is widely known, in BC, we also have Cohabitation Agreements for partners who live together or plan to, without getting married. Both types of agreements serve a similar crucial purpose: they allow couples to proactively decide how financial matters, property, and support will be handled if their relationship ends, rather than relying solely on the default rules set out in BC’s Family Law Act (FLA).
Signing an agreement before marriage (a prenup) or during cohabitation isn’t about expecting the relationship to fail. It’s about responsible planning, clear communication, and establishing mutual understanding when you are both happy and cooperative. It’s far less stressful and costly to agree on these terms now than to potentially litigate them during the emotional turmoil of a separation.
Here are five key reasons why getting a Prenuptial Agreement (or Cohabitation Agreement) is important in BC:
1. Customizing Property Division Rules
Under BC’s Family Law Act, assets accumulated during a relationship (“family property”) are generally divided 50/50 upon separation. Assets brought into the relationship (“excluded property”) are typically kept by the original owner, but any increase in value of that excluded property during the relationship may be shared. A prenup or cohabitation agreement allows you to create your own rules. You can clearly list which assets are excluded, decide how the increase in value of excluded property will be treated, or even agree on a different division scheme for family property altogether, providing certainty and avoiding future disputes.
2. Protecting Specific Assets (Pre-Owned Property, Gifts, Inheritances)
If you own property, have significant savings, hold investments, or anticipate receiving inheritances or substantial gifts from family, an agreement can explicitly state that these assets (and potentially any income or growth generated from them) will remain your separate property. While the FLA offers some protection for excluded property, an agreement provides an extra layer of clarity and customized protection, ensuring your intentions are clearly documented.
3. Determining Spousal Support Arrangements
Spousal support can be complex and emotionally charged. The FLA outlines factors courts consider regarding entitlement, amount, and duration, but the outcome isn’t always predictable. A prenup or cohabitation agreement lets you and your partner decide on spousal support terms in advance. You could agree to waive support entirely, set limits on the amount or duration, or define specific circumstances under which it might be payable. This predictability can save significant legal fees and emotional distress down the road. (It’s important to note: Courts retain the ability to set aside spousal support waivers or terms if they are deemed significantly unfair at the time of separation).
4. Clarifying Treatment of Business Assets
For business owners or those involved in family enterprises, a separation can create significant complications for the business itself. An agreement can outline how business interests will be valued, whether the business asset itself will be excluded from division, or establish a clear process for one partner buying out the other’s potential interest. This protects the business’s continuity and value from the potential disruption of a relationship breakdown.
5. Addressing Future Scenarios and Complex Families
Life brings changes. An agreement can address future possibilities, like how a potential inheritance one partner might receive years down the line will be treated. For blended families or second relationships, prenups and cohabitation agreements are especially useful. They help protect assets intended for children from previous relationships and clarify financial responsibilities, ensuring fairness and preventing future estate complications.
Planning for Peace of Mind
Ultimately, negotiating a Prenuptial or Cohabitation Agreement encourages vital conversations about finances, expectations, and shared goals early in the relationship. It ensures both partners enter the marriage or cohabitation with a clear, mutual understanding of their financial rights and responsibilities.
While BC’s Family Law Act provides a default framework, it’s a one-size-fits-all approach that may not suit your specific needs or wishes. An agreement tailored to your unique situation provides clarity, reduces the potential for future conflict, and can save considerable expense and heartache should the relationship end.
Crucial Considerations: For a Prenuptial or Cohabitation Agreement to be enforceable in BC, it must meet certain legal requirements. This generally includes full financial disclosure between partners and ensuring both parties have had the opportunity to receive independent legal advice before signing.
Considering a prenup or cohabitation agreement is a proactive and responsible step for couples in BC embarking on a shared future. It’s an investment in clarity and mutual respect.
If you would like to learn more about Prenuptial Agreements check out our other blog posts.
Disclaimer: This blog post provides general information only and does not constitute legal advice. Laws, interpretations, and court practices can change. You should consult with a qualified BC family lawyer to discuss your specific situation and receive tailored legal advice regarding prenuptial or cohabitation agreements. Set up a free 15 minute call here.