Give Me Back My Five Bucks

Do you have a marriage or prenuptial agreement?

Since our wedding date is in about 7 months, we’ve been talking a lot lately about marriage agreements (also known as prenuptial agreements). Did we need one? And if so, what would it look like?

I read a Global News article not too long ago that said that only 8% of couples in Canada had a prenuptial agreement, which actually really surprised me given that 4-in-10 first marriages in Canada end up in divorce!

So I asked people on Twitter if they had any sort of marriage / prenuptial /co-habitation agreement, and I got answers that ranged from “didn’t even think about it” to “wish we had, and now it’s messy.”

In British Columbia, couples who have been living together for at least 2 years share the same rights as married couples – which includes a 50/50 split of shared assets and debts. So basically you don’t have to get officially married in this province to be treated as a married couple in some aspects of the law. This can be scary for people who want to live with their partner, but either don’t want to get married yet, or just don’t want to get married at all.

When RD and I first moved in together, we talked at length about how we were going to split the household expenses, and made sure that every large joint purchase was split equally. This worked for us because we came into the relationship with similar assets, zero debt, and comparable salaries. But now that we’re getting married? We’re mostly in the “what’s mine is yours” boat, but there are some aspects of our personal finances that we both always want to keep separate. And we’ve seen too many seemingly great relationships fall apart to think we’re immune to divorce. So even though we both respect each other and (obviously) expect to spend the rest of our lives together, you can’t ignore all those scary statistics.

In researching the topic of prenups and marriage agreements, there were so many articles talking about how to approach your partner about the topic, how to resolve fights that escalate because of bringing it up, and how to convince the upset partner to get one in the end. I guess I don’t really understand why so many people think talking about a prenup is such a horrible idea. I mean, yeah it kinda sucks talking about potentially divorcing before you’re even married, but the financial topics surrounding what a marriage agreement entails are kind of must-have conversations anyway IMO – and will help you both think about your financial relationship in the future. I definitely know we had some good discussions surrounding topics we hadn’t even thought about before. Because if you put aside the emotions surrounding what marriage and a prenup both actually mean, you’ll see that personal finances play a huge role in every relationship, and is one of the leading causes of divorce.

Pros to getting a marriage or prenuptial agreement

  1. You are both protected in the worst case scenario. People compare marriage agreements with insurance, and that’s basically what it is. They exist for the sole purpose of being there if something goes horribly wrong. If you do end up getting divorced, you’re likely going to be in a complete emotional crisis (and you may not be thinking clearly). Having a document that lays out exactly what will happen will likely mean less stress, less fights, and less anxiety.
  2. Make plans when you’re happy together. If your marriage ends in divorce, it could be resolved amicably and maturely, but it could also end so, so terribly. One of the main reasons why a prenup might be a good idea is because you’re creating it when you’re happiest with each other – when you can be fair, and reasonable, and honest.
  3. Financial matters that need to be discussed get discussed. You get to talk about tough questions. Like, really tough questions. And discussing what a marriage agreement would look like also means you have to start thinking about finances and lifestyle – where do you really want to be in 5, 10, 20 years from now? And does that line up with your partner’s financial goals? What will you do in the future about income discrepancies, or windfalls, or inherited vacation properties, or family obligations?
  4. One or both of you have a substantial amount of property (or expects to acquire substantial assets). If you want to keep the family vacation home in your family’s possession, or if you plan to inherit a large sum of money or a business, it might be advantageous to have it put in writing that should your relationship end, those assets would remain in your name only.

Cons to getting a marriage or prenuptial agreement

  1. It’s pretty crummy timing. When you should be planning your wedding and talking about how great your new life together will be, thinking about breaking up is just about the last thing either of you want to do. It’s been a strange process listening to potential first dance songs one minute, and then talking through all the things that could happen if we were to divorce. But it’s important and we’re really putting in a lot of effort to think things through.
  2. It could be a deal breaker. For some people, the thought of a marriage agreement or prenup brings up thoughts of distrust, resentment, and could lead to questioning whether your partner is ready for a lifelong commitment. For me personally, I don’t see an issue with it – but perhaps that’s only because we come into the relationship with similar finances. Maybe I’d feel completely different if one of us had significant debt (or significant assets), or there was a large enough gap in our income levels.
  3. It can get expensive. It’s hard to predict what life will hold for you and your partner in the future, and it might be that your marriage agreement works for you when you’re newly married. But would it change if you had kids? Would it change again if one of you stopped working? Would it further change if there was an infidelity? Going to a lawyer every few years can be a costly expense that some couples don’t have the cash flow for.
  4. You’re young with little debt and little assets. If there aren’t any kids from a previous relationship to worry about, and neither partner has any assets to protect, a marriage agreement might not be the best fit.

So are we going to put together a marriage agreement? At this point, we’re not quite sure. But we are seriously considering it, and I would encourage anyone else living with a partner, or about to get married, to really start honest what-if discussions about the future if you haven’t done so already. You may come to realize that a prenuptial agreement isn’t the right way to go, or maybe you’ve decided that you definitely need one. Whatever happens, I think it’s naive to believe that divorce could never happen to you, and it’s also so important to keep an open dialogue going about money with your partner.

Do you currently have a marriage / prenuptial / co-habitation agreement with your partner?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


Comments

  1. G says:

    Interesting topic…my first engagement ended because of the dis-trust of our financial situation. Ex-fiancé did not want to disclose(he lived at home and had a high salary) and I did not want to share my home at the time with him as he would essentially get half once we were married(I was open to sell my home-prior to marriage-, keep my share and buy a home together-but he didn’t want to do this). My second fiancé(and now hubby) was very open, and instead of a pre-nup we shared our net worth statements as we both had homes of our own. We came to an agreement and have been happily married for 12 years(and many more)and discuss our finances quite openly.

  2. Jess says:

    Which aspects of your finances do you want to keep separate?

  3. Victoria says:

    My first husband and I bought a house before we were married. I had some money from an inheritance and we created a declaration of trust for ownership of the property that respected my additional financial input (in the end it was better for me to pay off his debts and take a slightly larger mortgage instead of me making more of a down payment). My input was respected as a percentage of the price of the property but we agreed to split any debts equally if we fell into negative equity. This was partly because my inheritance was part of a trust from a great uncle who specifically designed the trust to benefit the women in the family, as only the men normally inherited. My partner respected that and even when we sold that place and bought a new one he was happy for my initial percentage to be respected. We also had life insurance that would pay out more if he died than if I did because at the time he earned more and I was more likely to have poorer earnings from having kids (as we had planned).
    We didn’t have anything further when we got married and in the end 8 years later had a very amicable divorce with the declaration of trust activated.
    It does feel kind of depressing to talk about these things before marriage but I guess, as you say, in the modern and supposedly equal world, a couple should already have talked about finances and life plans. Like any contract (which a marriage is), it really is good to establish clear expectations from the beginning. Which isn’t to say that agreements can’t be amended if both parties agree later down the line.

  4. Steve says:

    My girlfriend of 1 year has a negative net worth while mine is about $1 mil. I want to bring up this topic with her but I don’t know how to do it without hurting her feelings. She is all about feelings and emotion and not too rational. In her eyes there is no chance that we would break up if we get married so there’s no point thinking about any other outcome. Like you said, it can be a deal breaker. I’m not sure how I can talk about this with her without losing trust between us.

    • Krystal Yee says:

      Yes it can definitely be hard to bring up the topic in your situation. Would it be possible to frame it as a discussion about the future to make sure that the two of you are both equally protected financially? You could reassure her that a prenup will allow the both of you together to decide what will happen to your finances (rather than leave it up to the courts to decide), and that discussing finances right now means you’re committed to planning for your future together.

  5. Nicole says:

    I honestly think everyone should do domestic contracts when they’re in relationships that could have financial consequences for them, including common law relationships. I work in family law so I see how frequently relationships go to pieces, and how people will spend a fortune battling over seemingly insignificant things (like someone who spent thousands in lawyer fees over who got the Tupperware set that cost $20…). You want to be protected. Like you said, it’s kind of like insurance – you don’t decide not to buy insurance because you think you’ll never get hurt or have a fire, etc. You buy it anyway because if the worst should happen you’ll be VERY happy about it.

  6. Layce says:

    We have a cohabitation agreement.I come other a lot more assets and he was a spender although I make significantly less. He now saves tons and has done a 180. But I disagree that imthe timing is a con. It’s perfect timing as your both happy, and when people are happy they can be amicable. The worst time would be when your splitting up; anger makes people do things they generally wouldn’t.

  7. TENN says:

    After 2.5 years of marriage, my husband and I still have separate finances. It just hasn’t been worth it to combine. He pays the mortgage and I pay other bills along with home improvements.

    I had more assets going into the marriage and he brought that up. I said that it would be a wash as his income is more than mine.

  8. GYM says:

    It’s almost taboo to discuss it but it’s good that you and your future husband are open to discussing it. It was certainly not an easy thing to discuss the potential of us splitting up with my husband during the wedding planning process. There were a few tears lol. But I’m glad we did it. The lawyer I went to didn’t really help though as he said “I personally wouldn’t do a prenuptial agreement for my wife because I want to take care of her even if we split up”.

  9. Leigh says:

    We got one, primarily because we had a substantial difference in net worth (multiple hundreds of thousands of dollars) and I owned the condo before we started dating. If the net worth difference had been minimal when we got married, we likely wouldn’t have done it. I still think that most couples would benefit from going through the entire thought exercise, but you don’t have to pay a lawyer for that! For us, the cohabitation agreement was far more useful as it declared he had no rights to the condo equity, regardless of how long he lived in it. We spent about $2000 getting our original agreement and I’m guessing we will spend less than half of that updating it this year.

    You’re right about as life changes, it can get expensive to update it regularly.

  10. Anne says:

    We don’t, though we fit the profile of people who should have had one. My husband has a child from a previous marriage and a pre-marital house. I have a pre-marital house and a high income with high savings/investments.

    I decided against pursuing one because I felt it was too emotionally complicated for both of us at a time when we just wanted to be happy. I also felt that if the worst came to pass and we got divorced, I would be able to be okay with whatever the financial hit might be, and I would of course be a decent person and not be out to harm him.

    I think the only way that a high percentage of people would have pre-marital agreements would be if it was mandated by either the government or most of the country’s religions: if it was an automatic pre-requisite to getting married, then it would be different. Since it’s up to the individuals, it makes it a lot more personal and a lot more emotionally fraught.

  11. Lisa says:

    My husband and I got married less than a year ago, and if there was one thing that we made sure we did – it would be getting a prenup.

    The reason being – well, Love is the reason that we got married, but at the end of the day what we were signing when we got married is a Marriage Contract. And if we’re already so cautious about signing any other contracts, why not this one? Not signing it might be the most expensive mistake a person can make.

    On top of that, I’m a real estate investor so I own multiple properties in Vancouver and out east in ON before I got married and I continue to buy more. So not having a prenup would just make things messy and overly complicated for us, both legally and financially.

    And yeah, I totally agree with you, I don’t get why people think talking about a prenup is such a terrible idea. When I asked my friends about it – no one got a prenup when they got married. They even thought I was being a pessimist for talking about it.

    IMO, talking about getting or having a prenup doesn’t imply divorce or that I’m not 100% dedicated to the marriage. It simply means we’re financially prepared and comfortable to talk about this like any other normal conversation.

    At the end of the day, you make the decision that is what you guys are both comfortable with!

  12. Hubby and I don’t have a prenuptial agreement mostly because both of us had almost nothing when we got married.

    One of my husband’s friends is getting married. He had so many more assets than his fiance and is definitely thinking about a pre nup.

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