Change of Plans: Postponed weddings give couples time to plan for their futures

Postponed Weddings and Prenups

The COVID-19 pandemic has caused a cascade of wedding postponements and cancellations. Many couples are deciding that they would rather hold off on celebrating their love (and changing their marital status) until it’s possible to come within six feet of family members and friends.

Postponing the big wedding day allows couples the opportunity and additional time to consider entering into a prenuptial agreement. If you were toying with the idea in the past, but got wrapped up in the party planning instead, now is the time to secure your financial future with a spousal agreement. What is more romantic than giving your future spouse certainty about how you intend to divide your assets and debts upon separation (if irreconcilable differences crop up) before tying the knot?

Adrianna Banaszek of Banaszek Family Law explains what prenuptial agreements are, and why they are becoming increasingly popular, especially among millennials.

What is a ‘Prenup’?

A Prenuptial Agreement (“prenup”) is a contract between two future spouses that settles issues of property and debt division, spousal support, or any other matters you wish to make crystal clear in the event of a party’s death or divorce. Entering into a prenup provides parties the opportunity to plan for the unthinkable, which is often difficult, but VERY important. Having a binding plan sorted out in the event of a divorce often saves spouses money because their matters are already decided and do not need to be mediated, litigated or arbitrated. Plus, it’s much easier for most couples to make clear and fair decisions during the “honeymoon phase” or the “postponed wedding” phase, instead of when they are questioning why they decided to walk down the aisle in the first place.

If you do not enter into a prenup, you will be subject to the Divorce Act (Canada) and legislation of your jurisdiction. In Alberta, for the most part, assets and debts accumulated during the marriage will be divided equally, save for exemptions which may apply (like gifts, inheritances and windfalls). Just because you acquired an asset before you began your cohabitation or before marriage, does not mean it is exempt from division with your spouse. The increase in value of “pre-marriage assets” during the duration of your marriage may be subject to equal division as well. If you do not want the legislation to automatically apply to your relationship upon dissolution, entering into a prenup is a way of contracting out of this framework.

The Prenup Process

Bringing up your desire to enter into a prenup or a cohabitation agreement to your partner may be difficult. Some people relate entering into a marriage contract as a sign of distrust, a way of jinxing the relationship, or extinguishing the passion. It may be beneficial to book an initial consultation with a family lawyer before discussing the matter with your partner so that you have an overview of the laws affecting you while you are not covered by a prenup. If your partner is already on board with entering into a marriage agreement, take note that at Banaszek Family Law, we will only meet with one party to the agreement to protect your interests, avoid a conflict, and to ensure that the agreement will not be overturned in the future.

Financial Disclosure Exchange: What’s mine is yours?

The exchange of complete financial disclosure (documents) between the parties to the agreement is part of the drafting process and one way of ensuring that the agreement is not overturned in the future. Sharing details about your assets (savings, property ownership) and debts/financial obligations (student and credit card debts, lines of credit, leases, mortgage) with the person you intend to spend the rest of your life with puts both parties on an equal “knowledge” playing field.

When each party’s financial picture is laid out on the table, the agreement to be entered into becomes more equitable. It also gives each spouse more information about their life partner. After entering into a prenuptial agreement, each spouse should be more prepared to make the decision to marry because they know what they are signing up for from a financial standpoint.

Independent Legal Advice

Once the agreement is drafted by Banaszek Family Law and both parties have had the opportunity to review and approve its’ contents, each party will obtain independent legal advice before entering into the agreement. This will require that your partner attends at a separate law firm and meets with a different lawyer to receive legal advice on the agreement and have their signature witnessed. Obtaining independent legal advice will help ensure that the agreement is not subject to being overturned because one party did not receive the full advantage of legal advice. Obtaining independent legal advice also significantly reduces the possibility that one party can overturn the agreement in the future by claiming that they entered into the agreement under duress or that they did not understand the legal impact of certain clauses of the agreement.

Prenups for the People

Prenups are no longer reserved for the famous and wealthy. Although pop culture often depicts prenups as a preservation tool for the rich party, the less wealthy spouse may also be protected under the agreement with the inclusion of clauses that benefit their position (often upon receiving independent legal advice on the agreement).

With common law relationships on the rise in Canada and Canadians waiting longer to get married or having to postpone their wedding due to unprecedented global events, more spouses are bringing assets (and debts) into new marriages rather than accumulating them together. Career and financial stability have become priorities before marriage for Canadian millennials (Cardus Family study, August 2016), which in turn increases the need for prenups.

There is a cost/benefit analysis which needs to be undertaken in advance of entering into a prenup, and usually the benefit outweighs the cost because there is so much uncertainty in the future and many people want to keep what they worked hard to accumulate prior to tying the knot. Prenups are now, more than ever, for all people!

Banaszek Family Law is here for you

It is very difficult to plan for all of the variables that may form part of your life and marriage but you can mitigate some of the risks by entering into an agreement with your spouse. The future holds a lot of unknowns, which has become evident with the sudden spread of COVID-19 and its’ adverse impact on countless lives worldwide.

Banaszek Family Law offers flat rates for uncontested family law agreements, including: prenuptial, postnuptial, cohabitation and separation agreements. Make the next move by scheduling your initial consultation with Adrianna Banaszek today, HERE. We are pleased to continue offering a discounted rate during July and August 2020 for telephone and video conference consultations.

Banaszek Family Law is here to assist you during this unprecedented time ●

Follow Banaszek Family Law on Twitter, Facebook, Instagram and LinkedIn for more updates on how COVID-19 is impacting family law issues.

The Basics of Spousal Support

This blog post is from the Banaszek Family Law’s “Family Law Basics” series. This blog series is meant to be a resource and provide some information regarding specific family law topics. These blog posts should not be taken as legal advice as most family law and divorce matters are circumstance-driven and require further analysis and advice from a legal professional. This week, Adrianna Banaszek, Calgary family and divorce lawyer, covers the basics of spousal support in Alberta:

Who is elibigle to claim support?

For married couples, spousal support is governed by the Divorce Act (federal legislation, meaning that it applies across Canada) and the Family Law Act (Alberta’s provincial legislation). Support for unmarried couples in Alberta is governed by the Family Law Act and the Adult Interdependent Relationships Act.

Under the federal Divorce Act, spousal support is most likely to be paid when there is a big difference between the spouses' incomes after they separate. NOTE: Just because one spouse earns significantly more income does not mean that their spouse will automatically be entitled to support payments. A court may decide that the spouse with the lower income is not entitled to support. The court may reach this decision if that spouse has a lot of assets, or if the difference in income cannot be traced to anything that happened during the marriage or relationship to require financial wealth be distributed more evenly between the parties.

Unmarried couples may be eligible for support if they meet the threshold requirements to be considered “Adult Interdependent Partners” as defined in the Adult Interdependent Relationships Act . In Alberta, you are considered an “Adult Interdependent Partner” of another person if you have lived together in a relationship of interdependence (section 3 of the Act):

• for a continuous period of not less than 3 years, or

• of some permanence, if there is a child of the relationship by birth or adoption, or

• have entered into an adult interdependent partner agreement with the other person under section 7.

There are limited legal protections to guarantee financial support from your separated partner if you do not meet the threshold requirements of the legislation. At Banaszek Family Law, we suggest entering into a Cohabitation Agreement to either ensure that financial support is paid or waived upon separation if you do not wish for the current legislative framework to apply.

How is entitlement to spousal support determined?

Unlike child support, spousal support is not an automatic right of a party who earns less than their spouse when they separate. The federal and provincial legislation strive to compensate spouses who have suffered financially as a result of the marriage/relationship or due to its’ breakdown. Judges consider various factors in determining if a spouse should receive support after a divorce. Some of these factors include:

1. the financial means and needs of both spouses;

2. the length of the marriage;

3. the roles of each spouse during their marriage;

4. the effect of those roles and the breakdown of the marriage on both spouses' current financial positions;

5. the care of the children;

6. the goal of encouraging a spouse who receives support to be self-sufficient in a reasonable period of time; and

7. any orders, agreements or arrangements already made about spousal support.

Judges must also consider whether spousal support would meet the following purposes:

1. to compensate the spouse with the lower income for sacrificing some power to earn income during the marriage;

2. to compensate the spouse with the lower income for ongoing care of children; or

3. to help a spouse who is in financial need if the other spouse has the ability to pay.

At the same time, the judge must consider that a spouse who receives support has an obligation to become self-supporting, where reasonable.

Types of spousal support entitlement

There are 3 categories of entitlement to spousal support: compensatory, non-compensatory and contractual (Moge v Moge; Bracklow v Bracklow). Compensatory spousal support is based on an economic disadvantage caused by the marriage to one of the spouses. Non-compensatory is needs-based support. The non-compensatory category acknowledges that married couples often become economically interdependent, and require financial support from the other to continue to meet their basic needs following separation. Contractual spousal support is agreed to by way of contract between the spouses.

Try this FREE spousal support calculator to obtain a general estimate of spousal support entitlement based on the duration of your relationship and each parties’ respective incomes. The Spousal Support Advisory Guidelines are not law but suggest appropriate ranges of support in a variety of situations for spouses entitled to support. The Guidelines are taken into account by lawyers in support negotiations and judges in making decisions about spousal support quantum and duration.

At Banaszek Family Law, we suggest you meet with a family lawyer to obtain independent legal advice as there are many factors which must be considered in confirming your spousal support obligations and potential entitlement to claim a particular amount (and length) of support following your separation from your spouse.

How does child support affect spousal support?

If either spouse is paying child support, the judge must also determine how a requirement to pay spousal support would affect child support payments. The Divorce Act clearly states that a judge must give priority to child support when a person applies for both child and spousal support. Both parents have an obligation to support their children.

To learn more about child support in Alberta, read our blog post: The Basics of Child Support.

How can I collect spousal support?

The Maintenance Enforcement Program (“MEP”) is a Government of Alberta program which collects court-ordered child support, spousal and partner support, and takes care of enforcement as needed. MEP is a free service which allows either the payor or the recipient of support to register the spousal support order. Introducing MEP into the mix may help reduce tensions for parties as the accounting and enforcement of financial matters is outsourced.

If you have a court order, you can register your order with MEP here. If you require assistance obtaining a court order for spousal support (whether it is a litigious situation or an amicable one which would be accomplished by consent of both parties) contact Banaszek Family Law to learn how we can assist you.

Need help calculating or obtaining spousal support? Banaszek Family Law is here for you.

A great free resource to assist you in understanding the process and documents required to vary spousal or partner support is found at the Government of Alberta website.

We highly suggest entering into a cohabitation agreement or prenuptial/postnuptial agreement to ensure that support obligations are either waived or secured in the event of a separation or divorce (depending on your desired outcome). To gain a better understanding of how a marriage or cohabitation agreement may be beneficial to you, read our blog: Prenups are for Lovers.

At Banaszek Family Law, we offer flat rate Spousal Support Analysis to provide you with a better understanding of what your support obligations or entitlement may be. Banaszek Family Law also offers independent legal advice and full representation with respect to spousal support matters in both Alberta and British Columbia. Make the next move by scheduling your initial consultation with Adrianna Banaszek today, HERE ●

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Parents Who Gift "Home Sweet Home": Banaszek Family Law explains how to protect a down-payment gift from equal division

Let’s face it… home ownership is an expensive and serious undertaking. For couples ready to purchase a house together, the intermingling of financial resources is almost certainly a must. In addition to pooling your life savings with your life partner to come up with an acceptable down-payment, many couples (eagerly) accept parental involvement (i.e. a down-payment gift) to make their home ownership dreams come true.

The gifting of down-payments by parents to their millennial children is on the rise as home ownership becomes increasingly unattainable by historical standards in many Canadian cities. Unsurprisingly, down-payment gifts have doubled from 7% in 2000 to 15% for homes purchased between 2014 and 2016 (Mortgage Professionals Canada). There are legal implications to consider when monetary gifts are poured into a down-payment for a soon-to-be married couple’s home, especially since a substantial amount of Canadian marriages end in divorce.

Dividing the matrimonial home upon divorce in Alberta

In the event of separation and divorce, both spouses will be entitled to half of the home’s value after the mortgage and other encumbrances are accounted for, even if part of the down-payment was a gift from one of the spouse’s parent(s).

[Unequal financial contributions between spouses to attain their home can also have significant legal implications if the parties separate in the future — Stay tuned for a future blog post on this issue!]

If it is your intention to protect the down-payment and ensure that it is either paid back to your parents or remains a gift that your spouse cannot claim entitlement to, steps MUST be taken to legally protect the intention of the gift. Although gifts received from third parties to one spouse alone are often exempt from the presumptive equal distribution under the Alberta Matrimonial Property Act, the matrimonial home is treated differently. The matrimonial home is an exception in family law, and division of the value of the home depends on the circumstances surrounding the down-payment.

For example, in Henderson-Jorgensen v Henderson-Jorgensen, 2013 ABQB 213, the Alberta Court of Queen’s Bench dealt with a claim by the Husband that his father had gifted him $83,500 for the down-payment on a condo which was later sold to buy the matrimonial home and he claimed that this money should not be divided with the Wife. The key finding of the Court was that the Husband’s father was gifting the down-payment to both parties equally. Therefore, the Husband’s claim for the $83,500 exemption from the matrimonial home value was denied by the Court (para 140-41).

If there is disagreement about how the value of the matrimonial home is to be split between the parties and the matter is litigated in Court, the intention of the person making the gift will be taken into account by the judge. Free of any agreement, each party will have to convince the Court that the down-payment was intended to either be a gift for both parties or specifically for one. A spouse claiming the gift is excluded from division of matrimonial property is responsible for demonstrating that the property is really a gift to them alone. The onus to prove this fact is on the spouse wishing to protect the value of the property for their sole benefit.

Protecting the down-payment gift from equal division

Parents wishing to make home ownership a reality for their children while also protecting their rights need to have documentation that clearly states that the gift is for one person (their child) only. If there is no contract or document ensuring that the down-payment is protected, the way in which the home is used by the parties will determine the status of the gift. This means that if the home is the primary residence of both parties, and especially if the couple is raising children in the home, it will be considered the “matrimonial home”. To help ensure that the down-payment gift remains with the intended person upon dissolution of a marriage, a prenuptial agreement is your best bet for preserving the significant contribution from being divided equally.

Prenuptial agreements can be executed before the parties marry, or parties who are already married may enter into a post-nuptial agreement to have the same contractual effect. A marital agreement will reduce the potential risk for financial disappointment when your emotions are already in a state of turmoil. If the parties are in a common law relationship and not married, a cohabitation agreement may also be used to outline the total down-payment contributions received from third parties to safeguard against an unintended “payout”.

Discussing the importance of a prenuptial or cohabitation agreement with your spouse usually alleviates financial tension down the road. Read about prenuptial agreements and the value they provided in Banaszek Family Law’s blog post: Prenups are for Lovers.

An added benefit of entering into a cohabitation, prenuptial or post-nuptial agreement is the requirement for the couple to disclose their financial circumstances to each other. Relationships often fail due to difficult financial circumstances and a lack of communication, so obtaining an understanding of each other’s finances before tying the knot may be a key to avoiding divorce (or at least gaining some certainty that marriage is the right choice in advance of making it official).   

The concurrent rise in down-payment gifts and rate of divorce makes entering into a prenuptial agreement to prevent a generous gift from being disturbed in an unintended manner a no-brainer. Banaszek Family Law offers flat rates for uncontested family law agreements for clients in Alberta and British Columbia. Family law agreements provide peace of mind for both the parents gifting down-payments to their children and the spouses purchasing their new home.

Make the next move by scheduling your initial consultation with Adrianna Banaszek today, HERE ●

Follow Banaszek Family Law on Twitter: @BanaszekLaw, Facebook, and LinkedIn.

Prenups are for Lovers: Banaszek Family Law dispels myths about marriage contracts

What is more romantic than giving your future spouse certainty about how you intend to divide your assets and debts upon separation (if irreconcilable differences crop up) before tying the knot? NOTHING. Adrianna Banaszek of Banaszek Family Law explains what prenuptial agreements are, and why they are becoming increasingly popular, especially among millennials.

Popular culture has depicted prenups as something the financially-advantaged partner would want to propose in an effort to preserve their wealth. The once thorny subject is becoming less taboo as more people understand the nuances of entering into a private agreement that governs your relationship.

https://www.youtube.com/watch?v=sEsIV79ixok

What is a ‘Prenup’?

A Prenuptial Agreement (“prenup”) is a contract between two future spouses that settles issues of property and debt division, spousal support, or any other matters you wish to make crystal clear in the event of a party’s death or divorce. Entering into a prenup provides parties the opportunity to plan for the unthinkable, which is often difficult but very important. Having a binding plan in the event of a divorce, usually saves spouses money because their matters are already decided and do not need to be mediated or litigated. Plus, it’s much easier for most couples to make clear and fair decisions during the “honeymoon phase” instead of when they are questioning why they decided to walk down the aisle to Ben E. King’s Stand by Me in the first place.

If you do not enter into a prenup, you will be subject to the Divorce Act (Canada) and legislation of your jurisdiction. In Alberta, for the most part, assets and debts accumulated during the marriage will be divided equally, save for exemptions which may apply (like gifts, inheritances and windfalls). Just because you acquired an asset before you began your cohabitation or before marriage, does not mean it is exempt from division with your spouse. The increase in value of “pre-marriage assets” during the course of your marriage may be subject to equal division as well. If you do not want the legislation to automatically apply to your relationship if there is no agreement to settle matters amicably, entering into a prenup is a way of contracting out of this framework.

The Prenup Process

Bringing up your desire to enter into a prenup or a cohabitation agreement to your partner may be difficult. Some people relate entering into a marriage contract as a sign of distrust, a way of jinxing the relationship, or extinguishing the passion. It may be beneficial to book an initial consultation with a family lawyer before discussing the matter with your partner so that you have an overview of the laws affecting you while you are not covered by a prenup. If your partner is already on board with entering into a marriage agreement, take note that at Banaszek Family Law, we will only meet with one party to the agreement to protect your interests and to reduce the chances of the agreement being overturned.

Financial Disclosure Exchange

The exchange of complete financial disclosure between the parties to the agreement is part of the drafting process and one way of ensuring that the agreement is not overturned in the future. Sharing details about your assets (savings, property ownership) and debts/financial obligations (student and credit card debts, lines of credit, leases) with the person you intend to spend the rest of your life with puts both parties on an equal “knowledge” playing field. When each party’s financial picture is laid out on the table, the agreement to be entered into becomes more equitable. It also gives each party more information about one another so that when they make the legal decision to marry, they know what they are signing up for.

Independent Legal Advice

Once the agreement is drafted by our office and both parties have had the opportunity to review and approve its’ contents, each party should (read: must) obtain independent legal advice before entering into the agreement. This will require that your partner attends at a separate law firm and meets with a different lawyer to receive legal advice on the agreement and have their signature witnessed. Obtaining independent legal advice will help ensure that the agreement is not subject to being overturned because one party did not receive the full advantage of legal advice. Obtaining independent legal advice also significantly reduces the possibility that one party can overturn the agreement in the future by claiming that they entered into the agreement under duress or that they did not understand the legal impact of certain clauses of the agreement.

Prenups for the People

Prenups are no longer reserved for the famous and wealthy. Although pop culture often depicts prenups as a preservation tool for the rich party, the less wealthy spouse may also be protected under the agreement with the inclusion of clauses that benefit their position (often upon receiving independent legal advice on the agreement).

With common law relationships on the rise in Canada and Canadians waiting longer to get married, more spouses are bringing assets (and debts) into marriages rather than accumulating them all together as was the case in the past. Career and financial stability have become priorities before marriage for Canadian millennials (Cardus Family study, August 2016), which in turn increases the need for prenups. There is a cost/benefit analysis which needs to be undertaken in advance of entering into a prenup, and usually the benefit outweighs the cost because there is so much uncertainty in the future and many people want to keep what they worked hard to accumulate. Prenups are now, more than ever, for all people!

Final Thoughts

It is very difficult to plan for all of the variables that may form part of your life and marriage. Although your marriage agreement can take many possibilities into account, there is always room for making changes to the agreement if it is by agreement of both parties and will be solidified with independent legal advice. It is often beneficial to reevaluate and update your marriage contract before or after big life changes, such as a change of career of one or both of the spouses, or a shift in the family dynamic (for example, the addition of children into the picture and shifts in caregiver roles).

You are NOT precluded from entering into a marriage agreement if you are already married. Spouses may enter into a post-nuptial agreement (“postnup”) if they are in agreement about the terms following their “I Do’s”. The risk you run into with waiting to see how your spouse feels about entering into an agreement after the wedding date is the potential for rejection. If you do not enter into a prenup before the marriage is solemnized, and if your spouse does not consent to enter into a postnup, the Divorce Act (Canada) and legislation in your jurisdiction will apply if you separate.

Banaszek Family Law offers flat rates for uncontested family law agreements, including: prenuptial, postnuptial, and cohabitation agreements. Make the next move by scheduling your initial consultation with Adrianna Banaszek today, HERE ●