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Financial planning tips

July 31, 2018

Pre-nup or post-nup: Why have a marriage contract?

A marriage contract can be a sign of love, not mistrust. And it’s not too late to draw one up, even after your wedding day.

“I thought those were for rich people.”

That’s what I said a decade ago, when my accountant casually suggested I shouldn’t walk down the aisle without giving serious consideration to getting a pre- or post-nuptial agreement – otherwise known as a “marriage contract.”

His suggestion immediately made me think of the sensational details of celebrity pre-nups about things like fidelity and weight requirements. That hardly sounded like the pursuit of true wedded bliss.

My accountant simply laughed. More Canadians should have marriage contracts, he said, since they can save a lot of grief – and money! – should you divorce. But is it too late to draw one up if you’re already married?

“A marriage contract can be entered into prior to the marriage or during the marriage, depending on the situation,” says Laura Paris, an associate lawyer with the Shulman Law firm.

She says people are more likely to get a pre-nup since it’s tied to the wedding date. But the time and financial demands of the preparations for the big day may push getting a marriage contract off your to-do list. Still, it’s still better to have a post-nup than to have no contract at all.

Whether you’re already happily married or you’re just hoping you will be, a customized marriage contract provides some important benefits:

1. You’ll be prepared, “just in case.”

While you hope your marriage remains strong, the statistics are real and divorce could happen. Knowing you have a pre- or post-nuptial agreement helps bring clarity and peace of mind, should you ever have to part ways.

2. You’ve worked out some of the contentious issues before things get contentious.

A marriage contract can be as simple or as complicated as necessary, based on each couple’s requirements. The contract outlines things like asset division of assets and spousal support; should you and your spouse separate, you already have a contract in place.

“This leaves little room for debate because it’s been set out,” says Paris.

3. You can account for changing financial circumstances.

If one spouse’s net worth has changed dramatically since you were first married, or stands to do so in the future, you may not want a default 50-50 split in the event of a separation or divorce. A post-nup can help avoid that split. Your post-nup can stipulate that assets acquired after the wedding (such as an inheritance) be divided based on who acquired them.

4. You can help protect your children.

If you have children from a previous relationship, you may want some of your assets to go to them rather than your spouse. For example, you might have inherited money from your late first husband, and you want to make sure that money goes to his and your children, not to your second husband. A post-nup can help ensure that those assets aren’t considered joint property if your marriage fails.

Whether you’re in the midst of wedding preparations or you’ve already said your “I do’s” and are working on living happily ever after, discussing the possibility of living not-so-happily ever after is tricky. How do you bring up the idea of a marriage contract without offending or upsetting your partner?

Hope for the best, prepare for the worst

Present a marriage contract not as an ultimatum, but as a mutually beneficial negotiation.

“The reality is, as human beings, we have to appreciate that things aren’t perfect and life throws a lot of curveballs,” Paris says. “While two people might deeply care for each other and be in love, sometimes there are things that happen in life that we can’t anticipate.”

To recognize and prepare for this today helps reduce the rancour of the potential post-split negotiations of tomorrow. A marriage contract is also, in its own way, a testament to your love for and devotion to each other: You care enough to head off contentiousness and difficulty well before it arises – if it ever does.

More long-term thinking to protect yourself and your family:

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