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Wednesday, March 29, 2017

Do you have an Exit Plan?

Posted by Dave on April 6, 2010

I don’t have a prenuptial agreement with my wife.  We talked about it (or I did) and the subject was dropped as some of the parties involved in the discussion found the whole thing mildly offensive.  Although not a very romantic idea (there is really no good way to bring up the end of a marriage before the wedding has even taken place) I think this kind of arrangement has merit and should at least be taken under consideration.

On top of a prenuptial agreement, I think that couples at some point should have a realistic discussion of custody for children and other shared property.  Maybe I’m a little odd, but according to 2008 estimates from Statistics Canada, 38% of all marriages in the country end in divorce (a low of 22% in Newfoundland and Labrador to a high of 48% in Quebec – the latest US statistics show 44%).  If I have a 4 in 10 chance (statistically) of something like this happening, I think at least a general discussion at some point in the relationship is warranted.

Having previously failed at a prenuptial, and besides the fact that I (and hopefully my wife) are very happily married, we have discussed some of the rules of divorce – after reading up on them for a friend who is going through this event, and now understand the basics of the law and who would get what (she believes I should have to pay a 25% tax because she is by far the more attractive of the two of us – something I don’t deny, but I’m unsure I should have to pay for :) ).  Beyond that, we don’t really discuss the end of our relationship – it’s just not that nice of a topic.

Here are some of the interesting things I did find out about divorce and separation law (in Ontario):

There are several ways that a separation can be arranged:

  1. An informal arrangement (verbal or in writing)
  2. Write down your decisions in a separation agreement, which must be signed by a witness.
  3. Through a mediator or arbitrator.
  4. Through the use of collaborative family law.
  5. By going to court and asking the court to decide.

The Family Home –   Both parties have a right to stay in the home – basically, you can’t be kicked out by your spouse – there has to be an agreement of who gets to stay.

The Divorce –  A couple can get a divorce by proving that the marriage is over either by:

  1. Showing that they have been separated for a year.
  2. Proving (not sure how) that your husband or wife has had a sexual relationship with another person.  Or,
  3. Your husband or wife has been physically or mentally cruel to you.

Child Support – I didn’t know that there was a table for child support that sets out the amounts based on the person’s income who is paying child support.

Spousal Support –  Is dependent on many factors that need to be well documented, such as:

  1. The age and health of the couple;
  2. Available employment opportunities;
  3. The effect being married had on employment opportunities;
  4. The contribution made to family care during the marriage;
  5. The family’s standard of living

I’m not sure how different other Provinces laws are, but those were the “high” points of this somewhat morbid topic for me, and I am hoping I never have to utilize the knowledge gained in this reading.

Do you and your spouse have a pre or post nuptial agreement?  Have you discussed what would happen at the end of your relationship?

Comments

13 Responses to “Do you have an Exit Plan?”
  1. MiddleWay says:

    Yes to both. We discussed this at length even before we started a joint chequing account.

    We got together (Common law) already owning reasonable amounts of assets and I did not wish to someday be buying half of my stuff back again…

    Before we got married, we revised our earlier agreement as things are legally 50:50 after that even though the true contribution may not be.

    We drew up Wills at the same time and it is nice not to have to worry about things now nor should things not work out as imagined.

    Niether of us will be in the poor house should we separate. I see it as protecting both of our interests — not romantic but neither is starting over from scratch financially…

  2. A 4 in 10 chance may be a little on the low side.

    Now that so many couples are just living together (shaking up) we may be seeing lower numbers in the divorce stats.

    I seem to recall that about half of “marriages” end in divorce. Those odds resemble a coin flip.

    In my limited experience…early retirement plans go out the window after divorce. It is perhaps the biggest threat.

    Here’s a topic suggestion…activities people can do each day or each week to help “preserve their marriage”?

  3. fred says:

    “I seem to recall that about half of “marriages” end in divorce. ”
    This is a classic misrepresentation of statistics. It is calculated by dividing the number of marriages in a given year by the number of divorces in the same year. It is incorrect. It is bandied about by people who have a vested interest in harping on about the high divorce rate (ie religious folk).

    This method ignores the large number of people who were married (and remain married) in previous years.

    The correct method calculates the probability of getting divorced over your lifetime…this comes to almost 40%
    Dave was correct.

  4. Nerode says:

    Fred – it seems to me that ‘religious folk’ have a vested interest in promoting the value of marriage, not the high probability of failure! I suspect you may have that comment 180 degrees out of phase with reality :-)

    Of course, I could be wrong.

  5. fred says:

    Nerode, they use the “high rate” of divorce as an example of the lack of morality in our society. They argue if we were “better” people, ie more religious, then divorce would not be as high as they say it is.
    :-) so you were!

  6. Nerode says:

    Fred, I don’t have evidence to support or disprove my guess; do you?

    In general, I put the kind of misuse of statistics in the way you’ve outlined down to ignorance, not malice. After all, only 2.46% of North Americans can do basic arithmetic; the remaining 95.3% just think they can :-)

    Back on-topic, I made a nuptial contract with my wife – that all my worldly goods are hers (and vice versa), so a pre-nup saying anything else would have been either redundant or hypocritical.

  7. addicted2dividends says:

    Prenups aren’t legally binding in Canada, so everyone better have a backup plan. Also If someone cheats, it doesn’t hold favor in court, Its still 50/50. My wife is a Lawyer, so I know I’m screwed If we get a divorce!

    I was also told that half of all marriages end in Divorce. If the couple both believe in God, its in the 30% range. If Both couples are involved in a church community, its 10%. It’s a sense of community that helps couples talk and work through problems…But it all depends on the people. I’m no zealot, but I see how it can help.

  8. Robert says:

    Another example of the misuse of statistics would be as follows. Suppose the same man (or woman) is married three times and divorced three times. He is just one screwed up person, but he skews the numbers. The probability of me getting divorced does not increase because of his experience.

    Further, I doubt that statistics can be applied to human behaviour. The stock market is a prime example, where “once in a lifetime” events happen every five years. The recent crash should have never occurred in the lifetime of the universe… are we just lucky, or are the statistics being mis-applied?

  9. Whoa. . .that’s a lot of divorce. Divorce seems like it would be painful regardless of the situation–but money trouble could obviously make things worse.

    That said, I don’t intend to get a divorce, so I must be one of the lucky 6/10 ;)

  10. I’ve actually heard the 50% thrown around in our church about Christians having a 50% divorce rate as well. I’ve heard it used as an example of the moral decay, but never as an incentive to become religious. Interesting to hear that the number is lower than I’ve come to hear.

    As for the pre-nup, we never discussed and have no intention of doing so. Sometimes I think you need to go into a venture thinking of success and ignoring the failure. Maybe ignorant, but I don’t think so. A lot of successful business people start businesses with failure not being an option.

    Also we came into the relationship as equals. So a 50/50 split makes sense regardless of who actually makes the money. We don’t have kids yet, but hopefully we’d both do what’s best for the children and not our own selfish needs.

    Just my 2 cents.

  11. Spelling error…”shacking” up not shaking up. But, on second thought the two may be somewhat interchangable.

    Seems like I hit a nerve…it was unintended. But it did promote discussion and that is usually a good thing.

    Sometimes the truth hurts.

  12. Dave says:

    @ Middle Way – That is significantly more organized than me.

    @ Canadian Money – Although I’ve only been married for a year, that’s a pretty good idea for a topic.

    @ Addicted2dividends: although the prenup themselves aren’t legal, a list of assets coming into the marriage would probably be a good idea.

    @ Robert – The formula for their calculation would have been useful.

    @ Simple in France – I don’t think anyone intends on getting divorced, otherwise why bother getting married :)

    @ Financial Student – I’m all for taking a leap. Money-wise it’s easy – if kids are involved the whole situation gets messy.

  13. Lisa says:

    Why are pre-nups not legal in Canada? I am in the process of one at the moment, with a lawyer, that will be reviewed by a second lawyer (his). I would hate to think that I’m throwing my money away here.

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