It’s becoming more common for couples to chat about money early on in relationships, move in together to cut down on housing costs, and sign prenuptial agreements.mofles/Getty Images/iStockphoto
Let us count the ways love has taken on new financial dimensions.
Dating etiquette now permits a “money talk,” including incomes, debt levels and attitudes toward saving and spending. Couples are moving in together to afford housing and weighing the economics of parenthood more heavily than ever in deciding whether to start a family. Now, add the rise of prenuptial agreements to this list.
A do-it-yourself digital prenup kit called Jointly was launched recently by a pair of B.C. lawyers who noticed a rising demand for this type of document, particularly among millennials and Gen Zers. Jointly has been approved by the Law Society of Ontario’s Access to Innovation Program for use in Ontario, and the Alberta and B.C. markets are next. The cost is $379, compared with $2,500 to $3,500 and up for a lawyer.
The idea for Jointly started with the rising number of people coming to see lawyer Aimee Schalles at her office in Revelstoke, B.C., asking her to review prenup agreements they had found online. She and Jointly co-founder Amanda Baron, both in their 30s, also noticed friends going through awful splits without prenups in place.
“They knew about prenups and co-habitation agreements, but they didn’t go through the process themselves because it felt weird,” Ms. Schalles said.
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Prenups can be seen as a symptom of mistrust between partners, but the Jointly founders think that’s an outdated view. “They’re really about getting a conversation started – what are we building together, how do we see this, what’s mine, what’s yours and what’s shared,” Ms. Baron said. “And if we split up, what’s fair for each of us?”
A rising interest in prenups can be linked to some big personal finance trends of the day, starting with expensive housing. The challenge of saving for a down payment has sensitized people to the risks of breaking up without a fair division of home equity, particularly when a parental gift of down payment money is involved.
Ms. Baron said another factor is that social media has empowered people, particularly women, to see marriage as being in part a financial merger where each partner brings certain assets. “We’re seeing a lot of interest from women,” she said. “They feel like it’s time for them to take control of this part of their lives.”
A personal finance trend that should drive more use of prenups is inheritances. A big wealth transfer from boomers to their adult children is under way and the amounts involved in some families will be in six figures. Parents giving this money may not want to see it shared with their child’s former spouse.
Jointly is structured as a tutorial on prenups coupled with a Q&A document-building process that can be completed in under half an hour. You can also use the software for postnuptial and co-habitation agreements. The printed document must be signed and witnessed.
Ms. Schalles said Jointly can be considered sufficient unto itself as a document in Ontario and B.C. In Alberta, both members of a couple must take the certificate of independent legal advice included with their Jointly agreement to be signed by a lawyer in their area. Note that courts can modify a prenuptial agreement if it’s seen as significantly unfair, or it doesn’t reflect a major change in circumstances.
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Among the issues Jointly can address is what happens to a pet in the event its “pet parents” – that is the preferred phrase for some owners today – break up. And, of course, what happens to a home. “For example, how should the equity be split?” Ms. Schalles said. “Is it based on how much down payment money was contributed or other things?”
She cited the example of a couple where one partner contributes $100,000 to the down payment and the other brings $200,000. This could be noted in the prenup, with options to split increases in equity proportionately or equally in the event of a break-up.
Ms. Schalles said Jointly also prompts couples to include information about inheritances they’ve received or expect to receive. Jointly can add clauses to a prenup that make clear what property is yours to keep, and that any increase in value during the relationship is also yours to keep.
Jointly is intended to be less expensive than having a lawyer draft a prenup, and both quicker and less awkward. “We’re trying to make it something that people actually do,” Ms. Schalles said.
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