About Marriage Contracts in Ontario
Marriage contracts can be entered into either prior to or during marraige. The intent of a marriage contract is to address any potential issues that may arise if and when the relationship of the parties breaks down. What is important to know is that once consummated, marriage contracts are binding upon the parties, and are enforceable by the court. Most parties generally enter into marriage contracts when one or both of the parties have a substantial amount of property or other assets that they wish to protect in the event that the marriage breaks down. Other reasons that parties may pursue marriage contracts include the parties wanting a predictable division of property and other assets so as to reduce any conflict or stress if the relationship were to break down, one of the parties entering into the marriage may have a substantial debt that the other does not want to assume in the event that the relationship were to break down, one or both parties may be bringing children into the marriage and the parties may want to stipulate parental responsibilities or support obligations, one or both parties may have been previously divorced and may want to feel secure in relation to their personal assets and financial interests, or either party may expect to receive a gift or inheritance from a family memeber or relative and does not want to include same in any equalization payment. However, in most cases those entering into marriage contracts simply wish to avoid the presumption in the Family Law Act that all assets accumulated by the parties during the marriage are to be divided equally between them upon its breakdown.
Marriage contracts are subject to the same legal requirements as are cohabitation agreements and separation agreements. A marriage contract must be set out in writing, signed by both parties, and witnessed. In addition, the parties should not be under the age of majority or suffer from any legal disability, and the agreement must clearly identify each party and the nature of their rights and obligations to one another. Both parties must also enter into the agreement freely and without undue pressure, influence, or coercion. It is also important that each party disclose in full their finances and be represented by a lawyer or at a minimum receive independent legal advice otherwise the agreement may be less reliable in the future and can thus be open to dispute.
Marriage contracts can be quite convoluted when it comes to drafting the agreement as it is not always easy to objectively predict the position of each party upon the breakdown of their relationship. For instance, one party may own a business at the outset of the relationship and many years later if that party's relationship breaks down he or she may have several new affiliated businesses as well as multiple investments that became available solely because of the excess capital from the original business or its affiliated entities. As it is obvious, this makes tracing capital difficult which thereby necessitates a careful and thorough analysis when drafting the agreement. However, marriage contracts are generally negotiated with precision given the complexity of issues that may arise. It is for this reason that legal representation or independent legal advice is highly recommended. By retaining a lawyer the parties will receive legal advice as to what the terms of the agreement mean, how their rights can be affected now and in the future, what the parties responsibilities are towards eachother, and what will happen in the event that the marriage breaks down. This helps to ensure that the contract cannot easily be overturned later on down the road in the event that one party claimed they did not understand what they were entering into when the agreement was consummated
If you are interested in having a marriage contract drafted it is important to understand what can be included in the said agreement. For instance, a few examples as to what type of provisions can be included include how property and assets will be divided upon the breakdown of the relationship, how title to property and other assets will be held during the marriage including title to the matrimonial home and to the parties bank accounts, whether the parties will share in the cost of the purchase of new assets, how unexpected windfalls will be dealt with including a lottery win, how household expenses will be divided between the parties during the marriage, how retirement savings will be equalized, and whether support will be provided by one party to the other.