What Is a Financial Agreement and Who May Draw One Up
A financial agreement is a binding contract in which a couple arranges their economic relationship in advance, determining how their assets, rights, and obligations will be divided if they separate or if one of them passes away. It is drawn up between married couples or between those who are about to marry, either close to the wedding or after it.
Unmarried couples, including common-law partners, do not draw up a financial agreement. For them there is a separate document, a cohabitation agreement, which governs their economic relationship according to its own rules. That agreement falls outside the scope of this page and is discussed at length on the dedicated service page.
In the absence of an agreement, the default rules of the Spousal Property Relations Law apply to the couple. Under those rules, upon the dissolution of the marriage each spouse is entitled to half the value of the assets accumulated during the marriage, that is, to a balancing of the monetary value rather than to a division of the assets themselves in kind. Generally excluded from the balancing are assets that belonged to one of the parties before the marriage, as well as assets received by inheritance or gift. Yet even these exceptions have a qualification: such assets tend to become commingled over the years with the joint assets, and may thereby give rise to a claim of specific sharing in them. This is precisely where the value of an agreement lies, as it allows the couple to determine in advance what will remain separate and to avoid the uncertainty inherent in this situation.
Did you know? The default under the law balances the value of the assets accumulated during the marriage, regardless of whose name they are registered in or who financed them. A financial agreement is the means to shape a different arrangement, tailored to the couple's wishes.
When Should an Agreement Be Drawn Up, and Why Timing Is Decisive
A financial agreement can be drawn up close to the marriage, before it, or after the couple has already married, and the timing directly affects the manner of approval and the simplicity of the process. An agreement drawn up before the marriage can be approved quickly and conveniently before a notary, without any need to turn to the court.
By contrast, an agreement signed after the marriage requires the approval of the Family Court or of a religious court. Beyond the cumbersome nature of the process, a late signing is also substantively more complex, because from the moment of marriage the resource balancing regime already applies to the couple, and a party who is not interested in the agreement effectively holds a veto. For this reason, I recommend drawing up the agreement close to the marriage, and not postponing it until the day a dispute has already arisen.
Professional tip: The clearer the agreement and the better it is supported by orderly documentation, the simpler and faster its approval. Preparing documentation of the assets in advance saves questions, shortens the proceedings, and reinforces the validity of the agreement.
What Can Be Arranged in a Financial Agreement
The core of the agreement is the division of property: which assets will be regarded as joint and which will remain in separate ownership, and how the property accumulated during the relationship will be divided. Thus, for example, the couple can determine that each will retain the assets they brought with them, or agree on a graduated division that expands over the years or with the birth of children.
The agreement also makes it possible to protect a particularly sensitive asset, such as a family business. Defining the business as a separate asset preserves its continuity and prevents a situation in which it would have to be split up or sold as a result of a separation. This is one of the central purposes of the agreement for couples in which one of them runs a business.
Protection Against a Spouse's Debts
An important and less well-known aspect of the agreement is protection against a spouse's debts. Ordinary separation of property does not provide a complete answer to debts that arise during the marriage, and so a spouse may find themselves exposed to a debt they did not create.
A financial agreement makes it possible to expressly provide that debts accumulated by one of the spouses will remain that spouse's sole responsibility, and to anchor the separation of assets in a manner that makes it difficult for one party's creditors to recover from the other party's assets. In this way the agreement becomes a genuine tool of financial protection, and not merely an arrangement for the event of separation.
What a Financial Agreement Cannot Arrange
Alongside its strength, the agreement has limits that are important to be aware of, and here several misconceptions are dispelled. First, matters of inheritance must not be arranged in a financial agreement. A provision of a testamentary nature, determining what is to be done with property after death, is not valid within a financial agreement and must be anchored in a separate will.
Second, matters of custody and child support are not final. The couple may set out an agreed framework, but the court is authorized to re-examine the best interests of the child at any time, and therefore such an arrangement is never entirely immune. Third, it must be remembered that the agreement is valid only after it has been duly approved, and the mere signing of it, without approval by a notary or a court, does not give it any validity.
Did you know? The court or the notary will approve the agreement only after being satisfied that both parties understood its meaning and its implications and signed it of their own free will, without coercion. This is why it is important that each party be separately represented.
Financial Agreement and Will: Two Complementary Tools
Because the financial agreement does not deal with inheritance, it leaves open the question of what is to be done with the property in the event of death. In the absence of a will, the property is divided according to the default under the law, which grants the surviving spouse and the children fixed shares that do not necessarily match what the couple would have wanted.
When the couple's wishes differ from the division prescribed by law, complementing the agreement by drawing up a will is a necessary step and not a luxury. The two work together: the agreement governs the couple's life together, and the will governs what follows it.
For further detail on drawing up wills and arranging inheritance, see the service page on wills and estates.
In Summary
A financial agreement is not about the end of the relationship but about security throughout it. It removes uncertainty, protects each party, and allows the couple to conduct themselves with transparency and peace of mind.
Because every couple is different, there is no single formula that suits everyone, and imprecise drafting may in fact open the door to a future dispute. I recommend drawing up the agreement with professional guidance that is familiar with the laws and the nuances, and knows how to tailor it to your asset structure and your specific wishes.
