Marriage Contracts/Prenups in Whitby, Ajax, Pickering, Oshawa

Increasingly, not just young couples or those with high net worth are entering into Marriage Contracts or Prenups when contemplating a big decision like marriage; clarity is a very good thing for everyone. That’s the point of a Marriage Contract or Prenup. The Whitby family lawyers at M. G. Michaels & Associates can help you draft specific, thoughtful, fair, and legally binding Marriage Contracts or Prenup. Although “fair” can be a subjective term, if a Judge deems that a Marriage Contract or Prenup is too one-sided, even though it is signed by both partners, it is in risk of being over-turned.

A Prenuptial Contract (or “Prenup” is another name for a Marriage Contract) that is entered into by a couple before they marry, while a Marriage Contract is typically signed after the wedding has already taken place. In the U.S., Marriage Contracts are called Prenuptial Contracts, or “Prenups.” Frequently, Canadians use the American “Prenup” term as well.

The purpose of a Marriage Contract or Prenup is to clearly set out each spouse’s expectations and wishes on various issues, such as property division or support, if the marriage should come to an end.

A Marriage Contract may also define each spouse’s expectations of one another, and promises made, during their relationship. A Marriage Contract can also ensure certain assets are protected to provide peace of mind, and to show one another that you and your spouse are on the same page going into the relationship, and know what each other’s expectations during the marriage and, more importantly, what they are in the event the marriage ends.

What Conditions go into a Marriage Contract?

Issues and topics addressed in a Marriage Contract which contemplate rights and responsibilities of each spouse during the relationship include:

  • How will household and other expenses be shared or divided?
  • What responsibility for debts will each party have during the relationship?
  • How will income be shared, if at all?
  • Will bank accounts be shared or kept separate?
  • Will property be purchased jointly or separately?

The formalities for a Marriage Contract are that it must be in writing, dated, signed by both parties and signed by a witness or witnesses. While each parties’ signature must be witnessed by a third party, since each party usually signs the Marriage Contract in front of his or her lawyer, the lawyer acts as the witness.

Additionally, Certificates of Independent Legal Advice, signed by each lawyer, are appended to the end of the Marriage Contract to show that each party understood the agreement they were signing and had a chance to speak to a lawyer about the implications of signing the Marriage Contract.

And, finally but importantly, the lawyers also confirm that there was no undue influence, duress or coercion, and that each party was signing the agreement voluntarily.

Issues and topics addressed in a Marriage Contract which contemplate a potential separation may include:

  • Property Division, if any
  • Debt Division, if any
  • Spousal Support, if at all
  • Rights to the family home (even temporary rights, such as continuing to live in the home for a defined period of time) (Although, the Family Law Act specifically prohibits the right of either person to contract a term regarding rights to continuing to live in the home)
  • How to deal with jointly held property
  • How to deal with unexpected windfalls, such as gifts or inheritances
  • Financial responsibilities for step-children after separation
  • A declaration of joint intentions after death to be confirmed by the Will of each party (for example, your property, or a portion thereof, goes to your children from a prior relationship)

What Terms Cannot Go in a Marriage Contract?

While Marriage Contracts or Prenups can lay out each person’s rights and expectations, both during and after a relationship breakdown, there are actually some items that the governing family law legislation does not allow people to include. If you ignore the law and include them anyway, a judge at court can void that part of the contract.

What terms cannot not be included in a Marriage Contract or Prenup?

  1. Parenting terms, such as child custody or decision-making, nor access or parenting time; or,
  2. Restrict the right of either spouse to be in possession of any matrimonial home exclusive of the other spouse.

Terms that we recommend not be included are:

  1. Opting out of the Table Amount of support under the Child Support Guidelines;
  2. Waiving their entitlement to receive disclosure prior to signing either the Marriage Contract or signing a Separation Agreement based on the terms of the Marriage Contract;
  3. Waiving their rights to obtain Independent Legal Advice on either the Marriage Contract, or a subsequent Separation Agreement;
  4. Forcing the parties to go to Mediation or Arbitration instead of court after separation (but the Whitby family lawyers at M. G. Michaels & Associates may later recommend you pursue mediation, arbitration, collaborative or other dispute resolution mechanism; we simply do not recommend agreeing to them at the beginning of your marriage); and,
  5. Compelling Canada Revenue to recognize the payment of support, for tax treatment, under the Income Tax Act.

5 Tips for Negotiating and Entering a Marriage Contract

A Marriage Contract can have a significant impact on not only the day-to-day functions and operations of your marriage, but perhaps even more importantly, it will impact how your life will look and feel in the event of a marriage breakdown and separation between you and your spouse.

It is common for spouses to underestimate or undervalue the impact a Marriage Contract may have on one’s future, since it is preferable to believe that their marriage will never end and therefore the Marriage Contract will never come into play. No one gets married thinking they will get separated and divorced, and yet Canada’s divorce rate has remained constant, at between 35-50%, for decades.

The fact is, life can be unpredictable and sometimes life throws us curveballs we never expected. We are also living longer, retiring later, having children later in life, and so on. If your marriage does take an unexpected turn, a properly prepared, planned and executed Marriage Contract will direct your legal rights and entitlements upon separation. Don’t be caught off guard with a Marriage Contract imposing rights and obligations on you that you can’t see yourself comfortably living with in the future.

Below are 5 tips to keep in mind when negotiating and entering a Marriage Contract:

Marriage Contracts, even more so than Separation Agreements, can be very complex legally and difficult to draft. Unlike in Separation Agreements, where we are, for the most part, dealing with current realities and known assets and debts, Marriage Contracts tend to speculate about the future, including how a marriage will operate and what assets and debts will be acquired during the relationship, and how the spouses will react to life’s unexpected events. 

While some speculation is inevitable (and even necessary) in a Marriage Contract, too much can be detrimental to the viability of the Contract. Further, many more potential traps and unexpected consequences can arise from a poorly drafted and conceived Marriage Contract. 

The “Do-It-Yourself” kit or recycled agreements taken from a friend and revised to change names should be avoided at all costs. While it may seem cheaper at first, this could cost you huge legal fees, or have unexpected and extremely negative consequences to you down the road. Having a properly drafted Marriage Contract is an investment in your possible future, and well worth the expense.

A Marriage Contract holds significant legal consequences for your rights and responsibilities in the event of a separation. It is important that you fully understand and appreciate what those rights and responsibilities are under the terms of the Marriage Contract you may or may not sign.

Further, it is important that you are aware of what your rights and responsibilities to, and owed to you by, your spouse under the laws of Ontario so you can make an informed decision about whether the terms of the Marriage Contract are appropriate for you, and will properly meet your needs if the undesirable separation occurs in future.

The Family Law Act of Ontario places great weight on the procedural fairness aspect of the development of Marriage Contracts. What this means for you is that the fairer the procedures engaged in while preparing the Marriage Contract, the stronger your contract will be in the eyes of the Court down the road if and when you need to rely on its provisions.

Procedural fairness demands that full financial disclosure be made between the two parties negotiating and entering into an Ontario Marriage Contract. If full financial disclosure is not adhered to, the contract may be at risk of being overturned by the Court at a later date. That means you both wasted your money because you did not obtain what you wished to obtain. Take the time and care to make full disclosure now.

If you or your spouse/fiancé(e) are unwilling to make that disclosure, consider whether that is a predictor of their behaviour during the marriage, and whether the marriage could ever be a true and equal partnership under the circumstances.

While it may be tempting on the part of one or both spouses to make promises to the other that are either different than those promises set out in the Marriage Contract or supplement those promises, those verbal promises and declarations are not only not legally binding, but most lawyers include a clause in the contract that specifically states that there were no promises made that are not explicitly spelled out in the contract. When couples are negotiating a Marriage Contract, they are doing so typically at a time where hope, positivity and commitment to each other characterize their relationship.

It is not at all unusual, if the progression of time leads a couple to separate, for those positive feelings have changed to more negative feelings that are reflected in the more to a separation. The desire to act on those verbal promises may have dissipated. If promises are to be acted upon, they must be included in writing in the Marriage Contract to be relied upon later.

One of the worst promises made and accepted by parties to Marriage Contracts in the past are, “the wedding invitations are out and the reception hall is booked; just sign now and we’ll fix it later; I promise it will be fair.”

Make sure you have given yourself and your spouse sufficient time to negotiate a Marriage Contract that meets both of your needs and underlying wishes. Once you start discussing the nitty-gritty of a Marriage Contract, you may discover that you are not as close to agreement on all of the issues that you may have thought. 

This is fine – it likely just means that you and your spouse need more time to contemplate and discuss the terms of the contract (your marriage and married life) before agreeing on what to sign. The more open the conversation before you sign likely means the better the likelihood that there will be fewer misunderstandings between you once married.

You do not want to rush into a Marriage Contract that does not adequately address your concerns or meet your needs simply because everyday life pressures or an impending wedding date (along with guests, ceremony and reception obligations and financial commitments) place an unnecessary burden on you to get the Marriage Contract done and signed in a short period of time. It is important to remember that a Marriage Contract can be signed after the wedding has already taken place, and that a prenuptial contract signed based on one party’s fear of a wedding being cancelled or postponed may be set aside by a judge due to pressure or coercion that occurred at the time of signing. 

How Can M. G. Michaels & Associates Help You?

Marriage Contracts can be tough. M. G. Michaels & Associates have long shared its view that Marriage Contracts or Prenups are nothing more or less than relationship insurance; you hope you don’t break-up down the road but, in case you do, you will be happy you have your contract.  Contact Us now to help you decide if a Marriage Contract is right for you and if so, make sure your Marriage Contract fulfills your intentions.