The holiday season is a time of celebration, reflection, and new beginnings. Between November and New Year’s Eve, engagements and cohabitation announcements are at their peak. Amid the excitement of these milestones, high net worth individuals and families should also take the opportunity to consider an important financial planning tool: a Marriage or Cohabitation Agreement.
Understanding Marriage and Cohabitation Agreements
In Canada, a Marriage or Cohabitation Agreement (commonly known as a Prenuptial Agreement or “prenup”) is a legally binding contract that defines how property, assets, and financial obligations will be managed if a relationship ends. These agreements can also address issues such as spousal support, the division of business interests, and the preservation of family wealth.
Why They Matter for High Net Worth Couples
For individuals with substantial assets, such as real estate, investment portfolios, family businesses, or trust interests, the financial implications of separation or divorce can be complex. A carefully drafted agreement can provide clarity and protection by:
- Preserving family wealth: Shield inherited or gifted assets, as well as future growth on these assets, from equalization.
- Protecting business interests: Maintain ownership and control within a family or corporate structure.
- Reducing conflict: Clarify financial expectations upfront to minimize the risk of future disputes or litigation.
- Ensuring privacy: Resolve financial matters privately, outside of the public court system.
Timing and Fairness Are Key
Courts are more likely to uphold agreements that are fair, transparent, and voluntary at the time they are signed. Full financial disclosure by both parties is essential. Discussions should begin well in advance of a wedding or move-in date; rushed or last-minute agreements are more vulnerable to challenge. Do not wait until the last minute to get your Agreement in place.
Each party should also obtain independent legal advice to ensure they fully understand their rights and obligations, and in jurisdictions like Alberta, it’s mandatory to do so. This not only strengthens the enforceability of the agreement but also demonstrates mutual respect and fairness in the process.
Addressing Common Misconceptions
Marriage or Cohabitation Agreements are sometimes viewed as unromantic or pessimistic. In reality, they are a practical and responsible part of financial and family planning, much like estate planning or insurance. These agreements do not signal a lack of trust; they simply provide clarity and peace of mind for both partners.
The Takeaway
A Marriage or Cohabitation Agreement is not about anticipating separation. Rather, it’s about building a foundation of transparency, security, and mutual respect. For high net worth couples, it represents foresight and good planning, ensuring that life’s most important relationships are supported by clear and fair financial arrangements.
At Linmac LLP, our family law team has extensive experience advising clients on the negotiation and preparation of Marriage and Cohabitation Agreements. We understand that these discussions can be both personal and complex, particularly when significant assets or family wealth are involved. Our lawyers provide clear, strategic guidance to ensure agreements are fair, transparent, and carefully tailored to protect each client’s interests while fostering mutual understanding and respect between partners.
For more information, please contact Brett M. Carlson or any other member of our Family Law Group.