How to Navigate Property Division in Your Relationship Agreement

Property division is an important part of any prenuptial or cohabitation agreement, as it determines how assets and liabilities will be distributed in the event of a breakup or divorce. Understanding how property division works and knowing what to include in your agreement can help you protect your assets and streamline the process in case your relationship ends. In this blog post, we’ll explore some essential tips for navigating property division in your relationship agreement.

1. Take Inventory of Your Assets and Debts:

Before drafting your relationship agreement, it’s essential to take stock of all your assets and debts, both individual and joint. This includes real estate, investments, bank accounts, vehicles, retirement accounts, and any outstanding loans or liabilities. This list provides a very useful snapshot of the value of both of your assets at a specific point in time.  Having a clear understanding of your financial situation will enable you to make informed decisions about how to divide your property fairly. 

2. Share The Inventory with Your Partner:

Once you’ve put together a comprehensive list of all of your assets, it is extremely important that you both share the full list with each other.  If you are not completely honest about your finances when creating a relationship agreement and you separate or get a divorce, a judge could decide that your agreement isn’t valid because it was based on dishonesty. 

3. Learn About Family Property Categories:

In Canada, property is typically classified as either family property or excluded property. Family property includes assets acquired during the relationship, including the increase in value of pre-existing property, while excluded property consists of assets acquired before the relationship, as well as gifts, inheritances, and certain other exceptions.  Under most provincial laws, property that is classified as “family property” is split evenly, while each partner keeps their own property that is classified as “excluded property.”  However, when you’re making your own relationship agreement, you can decide whether to divide your property along these lines.

4. Make a Plan with Your Partner:

In a relationship agreement, how your property is divided is up to you.  Some couples decide to take a “what’s yours is yours and what’s mine is mine” approach.  This can be suitable for couples who both work outside the home and have maintained some financial independence throughout their relationship.  On the other hand, in situations where one person has given up their career to support their partner’s career or to care for children, couples might decide that an agreement where all family property is divided equally would be more appropriate.  It is important to have an honest and open conversation with your partner about your plans for the future when deciding what is right for your family.  If your plans change after you enter into a relationship agreement, don’t worry!  Many couples will revisit their agreements after significant life changes like having kids or leaving a career.

5. Create Your Relationship Agreement with Jointly:

At Jointly, we understand the complexities of property division and are here to help you navigate the process with confidence. Our online platform guides you through the entire process of creating a customized relationship agreement, from asset inventory to equalization calculations, ensuring that your agreement accurately reflects your wishes and protects your interests.  By using Jointly to create a relationship agreement with your partner, you can minimize disputes and uncertainty down the road.

Don’t leave property division to chance. Take control of your future with Jointly and create a secure foundation for your relationship.  Click here to get started.