Listen on: Apple Podcasts | Spotify | Google Podcasts | Amazon Podcasts They’re not among the favourite topics of conversation for most couples, but prenups and other such agreements have a lengthy list of benefits. Lawyer and mediator, Kim Visram, likens them to house insurance.
“We want that house insurance in place in case there is a fire,” she says. We hope to never experience a fire, but having insurance makes the unexpected a tiny bit more tolerable.
These agreements are your insurance, should the unexpected ever happen in your personal relationship. We talked with Kim about what they entail and why they need to be addressed, especially if you own or have a stake in a business.
Kim is a partner at Stevenson Hood Thornton Beaubier LLP where her practice focuses on civil and estate disputes and family law. Agriculture is big business where Kim lives, giving her ample experience in managing agricultural legal matters.
She gives us the example of a family farm that a couple wishes to pass on to their son, who for the purpose of this story is named Dave. Should Dave and his wife, Mary, ever separate, and the jurisdiction where they live allows for it, the farm will be divided equally between them if no prior agreement has been put in place.
This example is a reality Kim has seen all too often, and why she stresses the importance of coming to an agreement before you ever need one. No matter your relationship status, a written agreement can protect your interests.
Prenuptial, antenuptial, interspousal and cohabitation agreements are labelled differently, but they share a common goal.
“There’s a lot of different terminology that gets thrown around when we’re talking about these agreements,” Kim says. “They all mean the same thing.”
They’re agreements between people in spousal relationships that set out the rules for that relationship, should there ever be a separation or a death in the family or another significant life event.
“Each province in Canada has legislation that deals with division of assets,” says Kim. “If you don’t like that law, the only way to essentially say, ‘Hey, I don’t want that law to apply to me in my relationship’ is to put an agreement in place with your spouse.”
If you’re moving in with a friend, you might be surprised to find out that spousal laws could still apply to your situation. In the event of a disagreement, courts will often look at living arrangements, how duties are divided in a household and how the relationship was portrayed to the public, amongst other factors.
“Even if you don’t personally think you’re common law, somebody might tell you otherwise,” says Kim.
Just as no two relationships are the same, neither are the agreements that dictate how assets should be divided if they don’t work out. An agreement can cover all assets or one particular asset, like an inherited family farm. It can also deal with matters such as disclosure.
Kim explains that if parents give their child even a small share of their company, that could mean disclosing details of the company’s affairs in a court of law should their child go through a separation or divorce.
“In my opinion, these agreements shouldn’t be adversarial,” Kim says. “Say, ‘Look, we love each other, we want to be in this relationship, we hope that it works out, but if it doesn’t let’s minimize the potential to find ourselves in a big, nasty divorce so that we can go our separate ways and move on.”
The earlier you can come to an agreement, the better, to avoid potential drama in the future and assess your financial compatibility. Kim points to studies that find fights over finances are still one of the predominant reasons that couples choose to divorce.
However, these agreements can be entered into at any time, whether before or after marriage. The extra time, effort and yes, expense that goes into them is minimal when you consider the time, effort and expense that you could face should your relationship go south.
“Do yourself a favour,” says Kim. “Have the discussion. Look at getting the agreement. In the long run, if the house burns down, you will be glad you have that insurance in place.”