Many people who have gone through a messy divorce realize at the end that if they had known then what they know now, they would have made some different decisions. As they say, hindsight is always 20/20.
Planning your life around being prepared for a marital separation may be cynical and cold, but it could save having regrets later. It is at least worth thinking about, even if it does not change your plans.
One of the most common things people wish they had done was enter into an agreement at the time they started their common-law relationship or before they got married. There are pre-nuptial and cohabitation agreements which can protect you from a variety of unfortunate outcomes.
Getting a proper legal agreement prepared may seem like an unnecessary expense, but it could save you a lot of money and heartache in the long run.
Purchasing a house together is a perfect example. Take a case where you were gifted a large sum of money from your family or have the sale proceeds of your prior home. If you put those funds into the new house, which is then registered in both names, you may later wish you had an agreement. If you separate, in the absence of an agreement allowing you to get your money out later, you may have to share the full value of the house equally.
There are sometimes regrets with other assets owned jointly. There are some important exceptions in the law which are not available for jointly owned assets. For example, assets you owned before you entered into the relationship do not have to be shared if you split up. However, the law of asset and debt division does not apply to jointly owned assets. If the item is in both names, it is generally presumed to be 50/50 shareable. So, for bank accounts, investments, vehicles, revenue houses or business assets you had before the relationship started, putting them in both names usually means you have to share them, when you would not have otherwise.
Often people decide to put assets in joint names as part of their estate planning. It may be wise in that context, but could be something you regret later.
Many people wish they had been more thoughtful with money they inherit while in a relationship. The law says that if you keep inherited funds entirely separate from family money or assets, they do not have to be shared if the couple separate. If the money is used to pay down joint debt or purchase a family minivan for example, the exemption is lost. Many spouses regret not putting away money, having investments or credit cards in their own name so they have access to funds immediately if they separate. A separation can be a very financially difficult time.
Some partners later wish they had not agreed to sign up for joint debt, or co-signing a loan for their spouse. If you co-sign a loan for your partner you may not expect to have to pay the loan. However, if your partner cannot make the payments for any reason, the creditor will be looking to you. A court order in family court will not help you escape from the debt. Bankruptcy is sometimes the only option at that point.
» Jodi Wyman is a lawyer with Paterson, Patterson, Wyman and Abel, with offices in Brandon, Neepawa and Virden.
Republished from the Brandon Sun print edition June 2, 2012