A prenuptial or cohabitation agreement specifies how property shall be distributed or divided in the event of a separation or divorce. Such an agreement can also specify entitlement to spousal support.
Without an agreement in place, any property that either spouse has an interest in may be subject to a claim by the other spouse. In Saskatchewan, family property legislation states that it is inherent in a spousal relationship that there is joint contribution, whether financial or otherwise, by the spouses and therefore each spouse is entitled to receive an equal distribution of the family property.
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So, what does this mean? Generally, the fair market value of any property that either spouse acquires an interest in during the spousal relationship is shareable between spouses upon separation.
In regard to property owned before a spousal relationship, the legislation generally provides an exemption for the fair market value brought into the relationship. However, any growth in value remains shareable.
Furthermore, you need to be able to prove or trace your exemption. So, if property is sold throughout the relationship, or commingled with other property, you could lose your exemption.
Also, it is important to note that there is no exemption for a family home or household goods. It does not matter who owned the family home before the relationship or who created the equity — a family home or household goods are divided equally if you separate.
The purpose of a prenuptial or cohabitation agreement is to alter these legislative rules. It’s your relationship and you and your spouse can agree on what should happen with your respective property or finances should you go your separate ways. Because every relationship is unique, each couple may have particular interests, needs or concerns to be addressed.
Who should consider a prenup?
You may consider a prenuptial agreement before marriage.
In Saskatchewan, if you cohabitate in a spousal-like relationship for a period of at least two years, you are considered common law spouses and have the same legal rights to property division as married spouses. As such, if you are moving in with someone, you may also consider an agreement of this nature.
Often, having these discussions before you move in allows you to assess the issues at the start of the cohabitation, opposed to facing a difficult decision after you have lived together for almost two years.
Couples may also look at entering an agreement if a significant life event occurs or is expected, such as an anticipated gift or inheritance. Similarly, if an individual is being issued shares in a family corporation or becomes a beneficiary in a trust, an agreement may be entered to address those particular property interests.
I don’t anticipate my relationship will end, so why a prenup?
No one hopes for a bad ending. However, just like you buy insurance for your home or car, hoping you will never need it, having a prenuptial or cohabitation agreement can provide you with similar insurance should your relationship end unexpectedly.
When you make the decision to cohabitate or marry, you should have conversations about money and property with your spouse. Having those conversations during happy times will honestly be easier than having them amidst or after a separation.
Talking to your spouse about your expectations, values, concerns and fears at the beginning can very well save you years and significant expense fighting about it later on.
Often when a separation does occur, emotions run high and people make decisions out of haste or spite. This increases conflict for both sides. Agreement on the terms of your separation in advance can alleviate this conflict.
A prenuptial or cohabitation agreement does not need to control or dictate how you spend your money or distribute your property during your relationship. It is there just in case you need it.
How do I talk to my partner about a prenup?
As with any big discussion, it is important to approach the subject with your partner in a sensitive way. The intention of this agreement is not to anticipate or plan for a separation. Rather, you are raising these issues with your partner to have a calm and loving conversation about your expectations and concerns should the relationship break down.
The conversation does not need to be confrontational and can be in preparation for making the major life decision to move in together or marry. Having this conversation now can save both of you significant emotional and financial stress and strain if the unforeseeable occurs.
If an agreement can provide both of you comfort and security, and mitigate the potential for a messy and expensive divorce or separation, isn’t an agreement of this nature a good thing for both of you?
Kimberly Visram is a lawyer and mediator with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at kvisram@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice.
