Everyone Has a Prenup

It Can Either Be the Government’s Prenup You Are Not Aware Of or a Prenup Thoroughly Prepared By One of Our Family Lawyers.

Many people believe that “prenups” (i.e. marriage/cohabitation agreements) are only for the wealthy, or only relevant if you plan to get married. In British Columbia, neither is true.

Practically, everyone living in a “marriage-like relationship” in British Columbia has a “prenup”, they just don’t know about it. If you do not have a written family law agreement in place, the Family Law Act of British Columbia automatically applies to you and your spouse when your spousal relationship ends. The legislation becomes the default (and often strict) set of rules governing property division, debt, and potentially spousal support. It does not matter whether you are married, and can apply as early as the 2-year anniversary of your relationship.

The choice people have is this: Do you want the government’s prenup, or one tailored to your life, your assets, your financial decisions, and your expectations?

The Law

The Family Law Act governs what happens when spouses separate in British Columbia. Importantly, the Act applies to:

·         Married spouses, and
·         Unmarried spouses who have lived together in a marriage‑like relationship for at least two years, or who have a child together.

Many people are surprised to learn that unmarried spouses have the same property division rights and obligations as married couples in British Columbia . Unless spouses have a valid agreement saying otherwise, the Family Law Act decides how property, debt, and support issues are resolved.

Division of Property and Debt

Generally speaking, “family property” includes:

·         Assets owned by either spouse at the date of separation
·         Property acquired or appreciated during the relationship
·         Pensions, RRSPs, investments, and business interests
·         Increases in value of certain assets during the relationship

The starting point under the Family Law Act is that all “family property” is divided equally, regardless of whose name is registered or on title. For example, say you have a $100,000 increase in the value of your RRSP over your 3-year relationship, both from contributions and market appreciation. Half of that RRSP is at risk of being claimed by your spouse upon separation. The same applies to other assets, such as real estate, financial accounts, cryptocurrency, equipment / gear, etc.

Just as property is divided, so too is family debt, which can include:

·         Mortgages
·         Lines of credit‍
·         Credit cards‍
·         Tax debt incurred during the relationship

Again, the default rule is equal division, even if one spouse incurred more of the debt or the debt is in only one name.

Spousal Support

Spousal support is not necessarily presumed, but it is a real and often overlooked risk, particularly where:

·         One spouse earns more than the other;
·         One spouse reduced their work capacity to care for children;
·         One spouse supported the other through education or career advancement; or‍
·         The relationship was lengthy (5+ years).

Spousal support is about compensating for economic disadvantage and/or helping spouses adjust financially after separation.

Even in relationships where people believe “we kept everything separate,” spousal support claims can still arise unless spouses have a written agreement waiving claims to spousal support.

The Solution: Written Agreement

British Columbia law allows couples to contract out of the default rules in the Family Law Act by entering into a written agreement (cohabitation or marriage agreement). These are commonly (and informally) referred to as pre‑nuptial agreements.

With a properly prepared written agreement, spouses can:

·         Decide how property and debt will be divided;
·         Protect excluded property and future growth;
·         Limit or define spousal support obligations; and
·         Create clarity, predictability, and financial peace of mind.

Are these written agreements valid?

Family law agreements are expressly recognized and supported by Courts in British Columbia and across Canada. For example, in 2023, the Supreme Court of Canada reaffirmed the importance of respecting family law agreements, stating:

“As a starting point, domestic contracts should generally be encouraged and supported by courts, within the bounds permitted by the legislature, absent a compelling reason to discount the agreement. This deference flows from the recognition that self‑sufficiency, autonomy and finality are important objectives in the family law context. Not only are parties better placed than courts to understand what is fair within the context of their relationship, but the private resolution of family affairs outside the adversarial process avoids the cost and tumult of protracted litigation.”

The bottom line is that you already have one of these agreements, the only questions is whether it is the government’s one-size-fits-all version or a version prepared and customized by one of our family law lawyers.

Ryan Kinghorn is a family lawyer at Coast Mountain Law who has extensive experience advising on, preparing, reviewing, and enforcing cohabitation and marriage agreements.

Whether you are, moving in with your partner, getting married, receiving a gift or inheritance, or making a significant financial move, plan for the future with clarity and protection.

Contact Ryan Kinghorn at r.kinghorn@coastmountainlaw.com to discuss your situation and see whether a written agreement should be prepared.