When two people decide to get married or become common law spouses, it is not often that their first consideration is the protection of their individual property rights. However, entering into a spousal relationship has significant consequences on each spouse’s property rights. When a couple gets married or cohabits as spouses continuously for at least two years (thereby becoming “common law” spouses), an interspousal contract executed prior to entering into the spousal relationship (more commonly known as a pre-nuptial agreement) may be useful to ensure that each spouse retains his or her individual property interests if the relationship ends. Once a couple is deemed to be spouses pursuant to The Family Property Act, any property owned by either spouse becomes family property, subject to certain exceptions and exemptions. In the event that the spouses separate, each spouse is generally entitled to half of the market value of the family property. Family property includes any property owned by one or both spouses, and includes items such as corporations, RRSPs and even farm crops. As a result, separating spouses must divide all of their assets equally, subject to certain exemptions and exceptions. One way in which individuals can protect their property rights when entering a spousal relationship is by executing an interspousal contract. A properly executed interspousal contract allows the parties to predetermine the division of their property in the event of separation.  Benefits of an Interspousal Contract A properly executed interspousal contract can allow individuals to avoid having their property divided according to Saskatchewan legislation. Instead, parties can create an agreement dictating how they want their property to be divided in the event of separation. Parties can choose to only deal with certain assets in their interspousal contract, such as shares in a corporation or a house that will be used as the family home. Any property that is not dealt with in the interspousal contract remains subject to division in accordance with the legislation. There are many circumstances in which a couple may wish to enter into an interspousal contract to protect their individual property rights. An interspousal contract may be useful for an individual if, upon entering a spousal relationship, he or she is the owner of a business, a home, has recently received an inheritance, or has significant savings. An interspousal contract can specifically provide that, in the event of a relationship breakdown, that spouse retains all property rights in that specific asset. Interspousal contracts can be amended, varied or cancelled at any point in the spousal relationship if both spouses agree. A new interspousal contract will take precedence over a previous one, which allows the parties to change the contract as their intentions change. Limitations of an Interspousal Contract Parties must abide by strict requirements pursuant to The Family Property Act in order to properly execute an interspousal contract. For example, each party must receive independent legal advice prior to signing the contract. Such requirements were enacted to ensure that neither of the parties is executing the agreement under duress or is the subject of undue influence. However, even if the interspousal contract does not comply with all the requirements of The Family Property Act, a court can consider the agreement as a factor when dividing the property. A court is entitled to interfere with an interspousal contract if the agreement is found to be unconscionable or grossly unfair at the time that it was executed. If a court determines that the contract was unconscionable or grossly unfair, the court may divide the property according to legislation and give whatever weight it deems reasonable to the agreement. Conclusion An interspousal contract can serve a useful purpose to individuals entering a spousal relationship. Seeking legal advice prior to commencing your spousal relationship can help you plan for your future and prevent possible legal issues regarding the division of family property. About the author: Katherine is associate practicing in the Regina office. About McKercher LLP: McKercher LLP is one of Saskatchewan’s oldest, largest law firms with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have made us a top ranked firm by Canadian Lawyer magazine (2011, 2013). Expertise, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions. This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances.  Counsel should be consulted concerning your own situation and any specific legal questions you may have.