If your fiancé has student loan debt, it’s important to have a prenup in place before you get married. Read our post to find out why.
In Alberta, the Family Property Act (previously the Matrimonial Property Act) determines how debts, including student loans, are divided in a divorce. Whether the debt was taken on before or during the marriage can impact how a lawyer approaches the case. Without a prenup, financial responsibilities can become blurred, leading to potential disputes.
A prenup is a legally binding contract that can outline how assets and debts will be handled if a marriage ends. We recommend that all couples consider a prenup, especially when student loan debt is involved. This helps to prevent confusion and protect both partners. A prenup is particularly important in the following situations:
After becoming engaged to be married, you learn that your fiancé has a student loan or other debt. How will this affect your financial future?
A prenup isn’t just about protecting assets—it also clarifies who is responsible for any debt. If there is no prenup in place, student loans or other liabilities could become a shared burden. A prenup helps to set expectations up front, so both partners know what they’re responsible for.
Laurie J. Tymchuk adds: “The court has discretion to take pre-marital debt paid off during the marriage into account in the just and equitable division of property. There is no legislated mandate though, and it is a discretionary remedy. So we would always recommend having a prenup in place to give certainty.”
Typically, student loan debt from before marriage remains the responsibility of the person who took it on. However, if shared income is used to make debt payments, complications could arise. According to section 8 of the Family Property Act, such contributions could potentially be seen as a shared responsibility. A prenup can ensure that each person retains responsibility for their own pre-marriage debt, preventing confusion later on.
Similarly, student loan debt accumulated during the marriage may be considered joint debt in Canada, particularly if marital funds are used to pay it off. In this case, one spouse might have grounds to seek reimbursement during a divorce. Without a prenup, the court will rely on provincial family laws to determine how debt is divided, which can vary depending on the jurisdiction.
While getting engaged is an exciting time, it’s important to be pragmatic. In Canada, 30-40% of marriages end in divorce. Rather than having disputes over assets and debts during a difficult time, couples should have honest discussions about their financial responsibilities before marriage.
These conversations help build a strong foundation by ensuring both partners understand each other’s financial situation. While discussing assets and debts may feel uncomfortable, having a clear plan in place can provide security and prevent unexpected challenges in the future.
If you have financial debt, you may want to avoid putting an additional burden on your partner–especially if children are involved. A prenup can clarify that your debt remains your responsibility alone, alleviating any potential strain on your spouse.
Debt can also arise during the marriage itself, making it important to understand your rights. For instance, if you and your ex-spouse co-signed a student loan for your child, you are both legally responsible for repayment, regardless of custody arrangements. Divorce settlements do not override loan agreements, so a separation agreement should clarify each parent’s student loan obligation. Courts may factor in income disparity, child support, and prior financial agreements when determining responsibility.
While discussing finances and student debt may not be the most romantic part of planning for your future together, a prenup can offer invaluable protection for both parties. When student loans are involved, a well-drafted agreement can help clarify how debts will be handled, ensuring that both you and your partner are on the same page. Having an experienced family lawyer guide you through the process will help protect your individual and shared interests, reducing future complications.
For more insights, be sure to review our post on the 10 Reasons You Need a Prenup.
Reach out to us today to schedule a consultation with one of our experienced family law lawyers. We’re here to support you through this important process and ensure the best outcome for your family.