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BAKER & BAKER
Family Lawyers
During your thirty minute complimentary consultation you will receive a free copy of the Ontario Divorce Handbook by Donald S. Baker, LL.B.
We ensure that all your questions are answered.
Marriage Contracts & Prenuptial Agreements
Marriage contracts (prenuptial agreements) are commonly applied in remarriage, particularly when there are children from a previous marriage and when people have accumulated assets. The benefit of an agreement is the certainty it gives a couple about their rights and obligations relating to property, separation, divorce or death.
Often people who own a number of assets on the date of marriage would like a marriage contract to substantiate what each spouse has possession of at the date of marriage and the value of such assets. This reduces a lot of difficulties if the couple separate.
Important reasons why you should obtain a Marriage Contract (Prenuptial Agreement)
In general, people with valuable assets, such as a professional practice, or those who are entering into a second marriage, choose a marriage contract (prenuptial agreement) that unmistakably sets out their property rights on death. A spouse who is in possession of a home on the date of the marriage may choose a marriage contract determining property rights because the other spouse would get half of the value of the home at separation, if they both reside in it as the matrimonial home.
Issues that can be resolved in a Marriage Contract (Prenuptial Agreement)
A marriage contract is best adapted to the needs of the parties. Marriage contracts can deal with very prudent matters, such as the disposition of a professional practice, or wide-ranging and address various aspects of property and support.
A marriage contract may be established prior to or during the marriage and accomplish the following:
A fundamental aspect of marriage contracts is financial disclosure. Your partner must be made aware of all your income, assets, debts, and liabilities, at the time the contract is entered into. Failure to disclose can make the agreement void at the choice of your partner.
If the parties want to share the value of any property on separation, they simply put it in joint names.
Issues that cannot be resolved in a Marriage Contract (Prenuptial Agreement)
Dealing with matters relating to your children can be the most emotionally challenging and distressing part of divorce. A marriage contract cannot deal with custody of, support for, and access to children.
The matrimonial home maintains a unique place in family law. Couples usually consider it as an asset belonging to both, but the matrimonial home is more than a valuable asset, it is the focal point of family life, and family members and children often develop deep emotional attachments to it. As a result, one of the most important exclusions to a marriage contract is that it cannot eliminate the specific right to possession of the matrimonial home.
Nonetheless, this exclusion does not mean that one party cannot relinquish a right to equalization of the value of a matrimonial home that one of them owns on the date of marriage. Moreover, people usually deal with sale and ownership of the matrimonial home in marriage contracts and rely on the court to uphold their expression of intent.
For professionals, contracts of employment, degrees, and licenses should not be considered proprietary items capable of division for the purpose of equalizing family assets.
If you are getting married and choose to enter into a marriage contract, it is vital to maintain records of any significant asset you own on the date of the marriage. It is much more difficult to obtain that information in later years.
Common Law Relationships
A cohabitation agreement is beneficial for couples choosing to live together, rather than marry. However, rights to claims in property are granted to married couples only. Claims to ownership of assets in common law relationships are based on trust principles rather than property rights. As a result, if a common law partner contests your ownership rights, you have the responsibility of establishing your rights before the courts, and they are not protected by statute as they are in marriages.
Marriage Contracts (Prenuptial Agreements) and Estate Planning
Estate plans should be drafted to be consistent with terms outlined in the marital contract to avoid litigation for surviving family members. Consideration should be given to purchasing life insurance to take the place of the value of your assets that are allocated to your children or partner.
A marriage contract must be entered into with full financial disclosure, independent legal advice with no undue pressure or misrepresentation. The Family Law Act allows a court to disregard support provisions if it finds them to be unreasonable.