3 Reasons to Sign a Prenuptial Agreement
More and more couples are entering into prenuptial agreements prior to getting married. These agreements fall within a greater group of contracts between spouses, which include prenuptial agreements (executed prior to marriage) , cohabitation agreements (for common law couples executed while cohabiting and may also contemplate marriage), and marriage contracts (executed during a marriage, prior to separation).
While these agreements are entered into in anticipation of divorce, in certain circumstances, they may also be executed in anticipation of death.
Here are 3 reasons to sign a prenuptial agreement/cohabitation agreement/marriage contract:
- Protects your wealth – If you are significantly wealthier than your partner, you can protect your wealth by signing a prenuptial agreement/marriage contract, wherein you may agree to exclude the entire value of your property, or certain parts of it, from your net family property upon separating from your spouse. In such a situation, you will be agreeing not to abide by an equal division of your net family properties and to retain legal and equitable ownership of all of your individual assets, thereby protecting the significant wealth you entered into the marriage with. Each of you will be returned to your respective financial positions prior to the marriage/relationship, notwithstanding any increase in the value of your assets.
- Ensures assets are distributed the way you want – This is more applicable to married couples, but may also apply to common-law spouses in certain situations. You have the ability to arrange the distribution of your assets according to your wishes. One or both spouses in a marriage may own assets from a previous marriage and intend that children from the prior marriage inherit those specific assets, rather than their current partner. Signing such a document will ensure that upon your death, your assets will be distributed according to your intentions, providing protection and security to children and/or relatives related to your previous marriage or relationship.
- Protects your business – By signing such a contract, one ensures that if the marriage ends by way of a separation, your partner does not receive shares, ownership and/or control of your business. It is often an unintended result of separation that the spouse of a business owner gains control and ownership of the business, including voting rights and decision-making authority relating to an entity/industry of which they have no previous knowledge or experience.