Prenuptial agreements were once almost exclusively for extremely wealthy individuals wanting to safeguard their assets from a marriage breakdown.
However, increasingly in Alberta, we are seeing couples of moderate wealth creating these legal agreements. As many people get married later in life, they want to protect the investments and property that they have accumulated.
Prenuptial agreements can help couples enter marriages with greater confidence and clarity from a legal standpoint.
Let us find out more.
What is a prenuptial agreement?
A prenuptial agreement or “prenup” is a legal contract drafted and signed by a couple before they get married. The document primarily outlines the financial responsibilities of each spouse as well as the ownership of personal and financial assets/debts should the marriage end, while it will often also address spousal support.
Provided a prenup is drawn up fairly according to Alberta’s laws and signed voluntarily, it can legally safeguard both parties’ interests when entering the marriage.
Generally, because of the importance of these agreements and the stringent compliance requirements, couples seek legal assistance to draft them. This ensures that both spouses understand their rights and obligations, and the agreement is legally enforceable under Alberta law.
Are prenuptial agreements enforceable in Alberta?
Prenuptial agreements are enforceable by the courts in Alberta if certain legal requirements are met, as required under the Family Property Act, sections 37 and 38.
The court will not automatically approve the terms of the prenup without being satisfied that the agreement is fair. If there is evidence of significant unfairness, a lack of disclosure or coercion, the agreement can be set aside by the court and the provisions of the Family Property Act will be enforced.
What are the legal requirements for prenups in Alberta?
Alberta sets out some specific requirements for cohabitation agreements, including prenups, which may differ slightly from those of other provinces and territories in Canada.
Under Alberta’s property sharing rules, each spouse is typically entitled to half of family property and is responsible for half of family debt, regardless of who owns it. While a prenup allows couples to vary markedly from these provisions, the agreement will only be legally enforceable if:
- The agreement is in writing, signed by both parties and witnessed properly by a competent adult not party to the agreement.
- Full financial disclosure ensures that each party has honestly disclosed all income, assets, and liabilities.
- Both parties seek independent legal advice before signing to ensure that they fully understand the consequences of signing the agreement and to safeguard against fraud, undue pressure, coercion or duress.
Note that the Family Property Act and all of its provisions apply to adult interdependent partners (AIPs) as well as married couples who want to end their relationships. So, AIPs can draft legally enforceable domestic agreements, the same as a couple who intend to marry.
Your Alberta family lawyer will ensure that your prenup is drafted fairly according to the laws, that you fully understand the terms and the consequences, and is legally enforceable should the relationship end in the future.
What can be included in a prenuptial or cohabitation agreement in Alberta?
Cohabitation agreements are the unmarried equivalent of prenuptial agreements, designed for couples who live together or plan to live together without being legally married. These agreements help clarify financial rights and responsibilities and reduce conflict in the event of separation.
If a couple plans to cohabit before getting married, it may be advisable to consider both a cohabitation agreement (to apply before marriage) and a prenuptial agreement (effective upon marriage), as different laws apply to married and unmarried couples in Alberta.
Both prenuptial and cohabitation agreements can be customized to reflect the couple’s unique circumstances and goals. They can address:
- Division of property upon separation, divorce, or death
- Ownership and treatment of the matrimonial home (note: special rules may apply)
- Management of family or joint debts
- Spousal support terms, including entitlement, amount, and duration
- Business or professional asset protection for one or both partners
- Financial responsibilities during the relationship, including expense sharing and joint bank accounts
- Dispute resolution methods, such as mediation or arbitration, to avoid costly litigation
- Inheritance rights and estate planning, including:
- Ensuring that children from a prior marriage are protected
- Preserving family wealth or specific assets
- Clarifying how assets will be distributed in the event of death
By clearly defining how property, support, and inheritance will be handled, these agreements provide peace of mind and reduce uncertainty. At Jennings Family Law, we help couples draft enforceable, customized agreements that comply with Alberta law and reflect your long-term intentions.
When can a prenup be challenged?
It is not uncommon for prenuptial agreements to be challenged by a partner who, at the end of the relationship, claims one of the following:
- A lack of financial disclosure by the other spouse.
- Failure to receive legal advice and to fully understand the consequences of the agreement.
- The agreement was signed under pressure or threat.
- Significantly unfair terms.
- A change of circumstances that would result in undue hardship if the terms of the agreement are honored.
If a prenuptial agreement is challenged, the judge will consider the evidence and may act to prevent hardship or unfairness.
Essential elements to include in a prenuptial agreement in Alberta
No two prenuptial agreements are identical, though most comprehensive agreements will cover the following:
- A clear identification and classification of assets owned by the partners, particularly what is considered separate property and what is considered marital property.
- How property and debts from the relationship are divided.
- Spousal support arrangements if the marriage ends: who pays what to whom, and for how long?
- A sunset clause specifying when the agreement is no longer valid (e.g., after a certain number of years of marriage or if a specific event occurs, such as the birth of a child).
Note that parenting time, decision-making responsibility, and child support cannot be reliably included in a prenuptial agreement. The Alberta courts retain the power to make such decisions in the best interests of the child at the time of separation or divorce.
Common misconceptions about prenuptial agreements
Before you go ahead and create a prenuptial agreement, it helps to be aware of a few common misconceptions:
- Prenups are only for the wealthy: Not true, as prenups can provide clarity and protection for any couple with assets accumulated before a marriage or AIP relationship begins.
- Prenups destroy trust: Not true, as they often help to build trust because both parties must be open and honest about their finances before the legal contract of marriage begins.
- Prenups make a divorce inevitable: Not true, as couples with prenups are no more likely to divorce than those without marriage agreements—this belief is not supported by any evidence. Remember, prenups are simply a precautionary measure, based on the relatively high divorce rate in relationships in Canada.
Can a prenuptial agreement be amended in Alberta?
Another common myth is that prenuptial agreements are set in stone and cannot be changed.
Ultimately, any prenuptial agreement in Alberta should clearly reflect the couple’s values and intentions. These values and intentions may change as life progresses, requiring updates to be made to agreements. Our family lawyers will help couples draft flexible, legally enforceable prenups that can be amended as circumstances change.
If you live in the Calgary area and need assistance with a prenuptial agreement, the experienced lawyers at Jennings Family Law can help you. Call (403) 316-0138 to request a confidential consultation, contact us directly online, or email Warren Jennings directly at warren@jenningsfamilylaw.com.
