02 // Mid Life and Late Life Remarriage

4 Reasons why you should have a Marriage Agreement

The experience of new love is one of life's highest pleasures. In the early stages of the relationship, new couples feel a rush of enjoyable emotions: love, deep affection, commitment, and excitement for life with one another. Love happens to young and old, and all have happy endings in mind when they choose to build a life together.

Many new couples do not realize the impact a future separation could have on their assets and finances. When two people find love later in life, they have different circumstances and responsibilities than those of a young couple. Some have grown children from previous relationships, and some have accumulated significant assets prior to meeting their new mate. Others want to structure their lives and finances as a couple in a less traditional manner. Couples benefit greatly from having an agreement in place that deals with property and other assets they brought into the marriage and assets they acquire during the relationship in the event of separation.

This type of agreement is called a Cohabitation Agreement or Marriage Agreement. These agreements are frequently referred to as "Prenups." In British Columbia, Cohabitation Agreement is the term used for couples who are in a common-law marriage relationship, whereas Marriage Agreement is the term used for couples who are legally married. The contents of these agreements are otherwise the same.

Setting out expectations and making an agreement about spousal support and division of property and debt at the beginning of the relationship ensures there are no surprises should the relationship end. Without this, the provisions of the British Columbia Family Law Act will automatically apply, and the results can be drastically different than what either party expected.

Cohabitation Agreements and Marriage Agreements can be made at the beginning of a relationship or at any time during the relationship.

Read on for 4 key reasons to have a Marriage of Cohabitation Agreement in place before mid or late-life re-partnering.

1. Plan for Success

While a marriage agreement sets out what would happen upon the breakdown of a relationship, it also stipulates what will happen to each spouse's estate if they are together ‘until death do them part'. These agreements permit spouses to leave gifts for each other in their wills, but commonly include a waiver where both agree not to contest each other's wills or make a claim against the estate of the other. Spouses can also customize the treatment of income and expenditures during their relationship in these Agreements. It is helpful for the spouses to set out their intentions as early in the relationship as possible to ensure they have communicated clearly how for day-to-day expenses will be paid.

2. Protect your Portfolio

Whether the parties have similar financial circumstances or different levels of wealth, an agreement allows them to predetermine the division of property should separation occur. When parties have worked hard to build their investment portfolios and equity, they want to ensure that they are the ones to decide how their assets are handled if a relationship breakdown occurs. These agreements can list assets that will be excluded from the division between the parties and may include a method to determine how other assets acquired during the relationship will be divided. Without such an agreement in place, the Family Law Act will apply, and the result could be vastly different than what either person expected. When you and your spouse have a written agreement on the division of assets and payment of spousal support prior to separation, you can potentially prevent the unexpected loss of tens of thousands - even hundreds of thousands - of dollars in real estate, financial investments, and income by way of spousal support.

3. Peace of Mind for Family

When a parent remarries or recouples later in life, their children and other family members can worry about the financial implications to their parent. At times they question the new partner's intentions in the relationship, but in any event, most want their parents to maintain the financial security they had prior to the relationship. In addition, family members commonly question whether their share of their parent's estate will be diminished as a result of the relationship. In these cases, knowing that their parent has considered and planned for these events allows their family to have some certainty about their parent's estate plan. In turn, the family may then feel free to be supportive of the relationship absent financial concerns.

4. Prevent Unnecessary Legal Fees

After a separation, former spouses must divide their property and debt, and in some cases determine spousal support amounts. Without an agreement in place, the British Columbia Family Law Act will apply by default. Therefore, it is wise for all people considering mid or late-life remarriage to have a family lawyer prepare an agreement on their behalf. Paying several thousand dollars to a lawyer to prepare a Cohabitation or Marriage Agreement can save tens of thousands - even hundreds of thousands - in legal fees alone to sort out the division of property and spousal support. The saying "an ounce of prevention is worth a pound of cure" is an appropriate way to think about the cost of preparing a marriage agreement.

Clarity Family Law offers Cohabitation Agreements and Marriage Agreements to our clients on a flat fee basis. We give our clients peace of mind about their financial future and certainty about the cost of our fees.