What do a business owner, a dog lover, and a couple with a mountain of student debt have in common? They could all benefit from a prenuptial agreement, of course! While prenups are often associated with the wealthy, they are increasingly relevant for a wide range of couples in Ontario. Let’s explore 15 situations where this often misunderstood legal document can bring clarity and security to your relationship.
#1: People with children from previous relationships
People who have children from another marriage or relationship and are marrying someone who is not the biological parent of their children, should consider getting a prenup because it can ensure that their assets remain in the family and don’t go to a new spouse in a divorce and/or in death.
#2: Pet parents
An Ontario prenup can include provisions regarding pet ownership, financial responsibility, and even visitation schedules. This can be especially useful for people who treat their pets like their babies and want to ensure their little friends remain in their ownership in the event of a divorce.
#3: Business owners
People who currently own businesses before getting married or plan to start one during the marriage should consider getting a prenup in order to protect their interests in their business. Without a prenup, they may be required to part ways with a percentage of the equivalent value of their business ownership. It can create significant problems for the business, taking on debt or selling assets to pay for the divorce settlement.
#4: People with debt
Let’s face it: no one walks down the aisle dreaming of inheriting their future spouse’s debt. And with student loans becoming increasingly common in Ontario – a staggering 67% of students carried federal loan debt in 2018-19 – it’s a conversation many couples need to have. A prenup can provide clarity and peace of mind, ensuring that your partner’s debt doesn’t become yours (and vice versa). Debt also creates a problem when it comes to equalization. Depending on how much debt your partner has, it can create very unequal property division in divorce and one in which you have to sell assets to pay your spouse’s debt.
#5: Current or future stay-at-home parents
Yes, prenups can protect more than just the breadwinner of the relationship. And as they should! Prenups can ensure that the stay-at-home parent who forgoes a career is also protected in the event of a divorce by providing spousal support or lump sum payments to compensate the homemaker for their services during the marriage.
#6: People with family money or a future inheritance
If you are a Canadian with family money, and you are going to be a part of the “Great Wealth Transfer” (where $1 trillion dollars from Canadian baby boomers will be passed on to the next generations), then you should consider getting a prenup to protect that future inheritance and ensure it “stays in the family” and doesn’t get divided up in a divorce. It also provides you with the flexibility to use and enjoy the inheritance and not leave it sitting in a bank account.
#7: People with retirement funds they want to protect
Prenups can protect virtually any asset, but one common reason to get a prenup is to protect pensions, retirement funds, and the future contributions towards it. For example, let’s say you have a modest retirement fund when you get married, but you plan on maxing out your RRSP during the marriage, every single year during the marriage. You risk losing a percentage of that growth from your retirement account in an Ontario divorce. Enter: The Prenup with a clause protecting your hard-earned retirement fund.
#8: People with real estate portfolios
Another simple but common reason a person should consider a prenup is owning real estate. Whether you’re a real estate mogul or simply a single-family homeowner, you can ensure your initial investment and appreciation on real estate remains separate property in a potential divorce.
#9: People who want to protect their social media image
A lesser-known reason to get a prenup is to protect your social media image. Maybe you’re an influencer with millions of followers, or maybe you’re just a normie like the rest of us. Either way, including a clause that says neither party can disparage the other on social media at any point (during the marriage or after a divorce) may be a smart thing to include!
#10: People who want to get aligned with their future spouse
The simple act of getting a prenup in and of itself is a way to align yourself with your future spouse. You are required to discuss finances (you are legally required to share the values of all of your income, assets, and debt), you are required to agree to terms of the marriage and divorce, and you have to discuss long-term goals, such as career paths, retirement, and children. All of these conversations combined make for a great way to get aligned with your spouse before walking down the aisle.
#11: People on their second or third (or fourth or fifth) marriage
We probably don’t have to tell you already if you’ve already been through divorce a few times, but having a prenup may just save you from repeat heartbreak, stress, and money! As you likely already know, divorces aren’t cheap or fun, and having a prenup speeds up the process by having property division issues already pre-determined, saving you money along the way.
#12: People who want to protect private information
One simple but effective clause you can include in your prenup is a confidentiality clause (effectively an “NDA” in your prenup). This says that neither spouse can share private information at any time, such as info about the prenup, financial information, business secrets, personal info, etc. This also includes while married, during the divorce, and forever and ever after the divorce is finalized.
#13: People with intellectual property
Whether you’re the most famous Ontarian resident (a.k.a., Justin Bieber), with millions of dollars of intellectual property, or simply an aspiring artist/creator/inventor/business owner, adding an intellectual property clause to your prenup can be a smart move to protect yourself from losing a portion of the value of your hard earned creations.
#14: People who want a cheaper, quicker, and “easier” divorce process
Getting a prenup saves time. It saves money. And it saves you headaches. How? Prenups are like a fast-track option in an Ontario divorce. You can speed through the property division and spousal support parts because you’ve already agreed to all of the terms. Then, you can simply focus on any remaining issues, such as child support/parenting if necessary. This saves you money from having your lawyer spend less time on your case. Win-win!
#15: People who want to have financial transparency with their future spouse
According to Part VI, Section 56 of the Family Law Act, a lack of proper financial disclosure can lead a judge in Ontario to set aside a prenuptial agreement. This means you are required to disclose all of your assets, income, debt, and future inheritances with your bride or groom-to-be. Through this process, you will learn a lot about your spouse’s financial situation, bringing you closer together right before the big day!
The bottom line is everyone should consider getting a prenup
While we may be biased, we do think everyone should at least consider the idea of a prenup. But if you fall into one of the 15 categories above then you definitely should consider getting one. They make your life easier, bring you closer to your future spouse, protect your assets, protect your pets and kids, and so much more–what else could you ask for? The best news? Getting a prenup in Ontario is as easy as finding maple syrup. So, talk with your spouse, get your ducks in a row, and get started on that prenup!
Anna-Marie Musson is a Family Lawyer with over 20 years’ experience. A graduate of Windsor Law, Anna-Marie began practising in 2003. She was a partner at a prominent national Bay Street law firm before starting her own firm. Anna-Marie helps professionals and high net worth clients navigate the financial, emotional, and legal issues in divorce and separation. She also helps clients preserve their net worth and avoid financial ruin with Marriage Contracts (Pre-nups) and Cohabitation Agreements. Anna-Marie is the host of the Modern Divorce Show on 105.9 The Region and also hosts the upcoming Podcast – Love & Wealth.
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