What You Must Know Before You Sign A Prenuptial Agreement In Ontario
Marriages are difficult enough without you having to worry about how your assets will fare should you separate from your spouse. Although it may dampen the bliss that usually precedes a wedding or a new relationship, experts caution in favour of having a prenuptial agreement or, in short, a “prenup”.
While Prenups do not guarantee that marriages will last, they can relieve and limit the uncertainty or acrimony that at times accompany separations and divorces.
Prenups must be taken seriously as they are legally binding. But for them to be valid, they must be carefully prepared. Here’s what you need to know ahead of signing a prenuptial agreement in Ontario.
Prenups in Ontario are called domestic contracts
Prenuptial agreements under Ontario’s family law are called domestic contracts, though both terms are generally used interchangeably across Canada. Domestic contracts may either be marriage contracts or cohabitation agreements, depending on your union. They are legal, written agreements made either between two individuals who intend to marry or cohabitate or who are already married or in a common-law union.
Once a couple in a common-law union gets married, the cohabitation agreement automatically becomes a marriage contract.
Typically used to protect a party’s assets in the event of a breakup, domestic contracts also serve to document the rules which will govern the term of a couple’s union and separation at death or divorce.
Issues coverable in a domestic contract
You can make provisions for all kinds of eventualities in a domestic contract, excluding those that violate the law. However, the following issues are most often included:
- The roles and responsibilities of either party during the union
- How property is to be owned and divided after a divorce or death
- Spousal support obligations and the duration
- Treatment of inheritances received during a marriage
- Who will direct the education and moral training of the children of the union
- How each spouse’s retirement accounts, life insurance policies and pensions will be divided
- Provisions for the surviving spouse upon one spouse’s death.
Issues prohibited in a domestic contract
A domestic contract cannot predetermine child custody matters, visitation rights or child support obligations. Custodial arrangements are made based on what is determined to be in the best interest of the child at the time of a breakup.
Provisions that grant more than half of a pension to one spouse are prohibited, as are chastity clauses that prevent a spouse from receiving continued support after remarriage or cohabitation with a new partner.
Marriage contract and the matrimonial home
The matrimonial home is any home that is used by the spouse and family as a residence. This includes the primary residence as well as a vacation home, for instance.
The rights of spouses to the matrimonial home is governed by the Family Law Act. These rights supersede any relating provisions in a domestic contract and are related only to married couples.
The Family Law Act states that both spouses have equal rights to live in and possess the matrimonial home as well as share in its value regardless of who owns it. Additionally, a spouse can neither sell nor mortgage nor borrow against the matrimonial home without the written consent of the other spouse.
Domestic contracts can be set aside by the courts
Provisions of a domestic contract or the contract in its entirety can be set aside by the courts should the following circumstances obtain.
- Either spouse failed to disclose any assets, debts or other liabilities at the time of preparation of the contract.
- A party did not grasp the nature of the consequences of the contract
- A spouse was pressured into signing the contract
- The agreement was not in accordance with the law of contract
- Provisions in the contract are deemed unconscionable. Having separate lawyers can help to mitigate this and ensure that the interests of both spouses are represented.
Conditions for an enforceable contract
Ontario’s Family Law Act necessitates that to be valid the domestic contract must be in written form, signed by both parties and witnessed.
A marriage can revoke a will
Once an individual marries, his or her will is automatically revoked, unless the will was made in anticipation of marriage. If you plan on getting married, you are advised to review your will and make sure it pertains as intended after marriage.
Protect your assets and your interests with a domestic contract
Having a domestic contract can be the difference between financial distress and peace of mind. However, to be able to protect your peace of mind, it must be properly prepared and ironclad.
If you have been asked to sign or are thinking of drafting a prenup, allow a prenuptial agreement lawyer at Baker and Baker Family Law to help you. Our lawyers have a wealth of experience from which to draw to ensure your needs are met.