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
- 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.
- 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.
- 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?
- 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
- 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.
- 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.
- 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.
- 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.