A prenuptial agreement is a legal contract that a couple creates prior to marriage, outlining what happens to their assets and debts on separation. If you or your spouse to be are considering a prenup, our lawyers are ready to discuss your options with you.
What are Prenuptial Agreements?
In Ontario, marriage treated as a partnership between spouses. The law treats married couples as having equal financial interest on all assets acquired during marriage and for any growth in value on assets before marriage, regardless of ownership.
Many couples are entering prenup agreements in order to have certainty and to decide how their assets will be divided if they separate. Many times the equal partnership model does to result in a fair and equitable result on separation, which makes a prenup more important than ever. Many clients assume all assets are shared equally on divorce but that simply isn’t the case. There are many nuances when it comes to property division that can lead to a significant loss in one side’s net worth.
Before entering a marriage, it important the couple understands their responsibilities and rights in family law. After both sides are clear on the legal model, they can take steps to make changes to how the law would apply to their specific situation. This is where a prenuptial agreement in Ontario comes in. It serves as a guide for settling the couple’s finances and property in the unlikely event of a divorce.
If you sign a properly drafted prenuptial agreement and you get divorced, the agreement will outline what happens to your assets and debts on separation. You will know exactly what to expect and you will not need to spend thousands of dollars on lawyer’s fees fighting over assets and equalization.
While you can easily access online prenuptial agreement templates, you should seek experienced legal advice to draft a comprehensive prenuptial agreement. Most times the templates are missing critical information and won’t be upheld if challenged in the future. For a prenuptial agreement to be enforceable, it must meet all legal requirements and it cannot be unconscionable. Crafting a fair and reasonable agreement for both people, is key to a successful prenup agreement. A skilled family lawyer should represent you throughout the agreement drafting process and to advise you on your rights and obligations.
Prenuptial Agreements vs. Marriage Contracts
In Ontario, prenuptial agreements and marriage contracts are the same document – a contract that spouses sign before marriage outlining what happens should they separate. When this contract is created after marriage, it is often referred to as a postnuptial agreement but it is also a marriage contract. However, marriage contract is a broad term that covers agreements made before and after marriage.
Couples in a common law relationship can enter into cohabitation agreements. In Ontario, common law partners are two individuals who have been living together continuously in a romantic relationship for at least three years or they have a child together. Cohabitation agreements allow such individuals to set out specific rules to guide their separation process.
Such agreements usually automatically evolve into marriage contracts if the common law partners decide to marry. Consult our experienced family lawyer to draft a prenuptial agreement, cohabitation agreement, or a postnuptial agreement that protects your rights and interests.
Components of a Prenuptial Agreement in Ontario
Here are the key elements of a prenuptial agreement in Ontario.
Division of Property and Ownership
One of the issues spouses deal with in separation or divorce is determining how the family property and other assets and debts will be divided. The family law property division process is complicated, but a carefully drafted prenuptial agreement can help set clear guidelines.
Without a prenup or marriage contract, your property will be divided based on Ontario law at separation. Spouses are automatically entitled to an equal share of the net family property and equal rights to any profits linked to their marriage.
That means if you do not have a valid prenuptial agreement, you will generally split all the marital property equally. The reason for divorce does not matter. The same rule applies to the appreciation (increase in value) of the separate property you or your spouse owned before marriage. A prenup allows couples to address the issue of property division appropriately.
Spousal Support Obligations
In the event of divorce, a non-earning or lower earning spouse can seek spousal support to start living independently. A court will assess various factors to award spousal support to the eligible receiving spouse. Couples can include different options when it comes to spousal support including caps on duration and amount of support or a release on spousal support altogether. Spousal support provisions in a prenuptial agreement must be properly drafted and fair or a Court may set aside the agreement. This often leads to frustrating court battles that may take a long time to conclude.
Legal Protection for Children
Many couples have children from a previous relationship and they want to protect their family assets to the benefit of their children. If you are cohabitating with another person or you are planning to marry, a prenuptial agreement is a must. You need to protect your kids’ interests in the event a parent passes on or there is a divorce or breakup from this second marriage or relationship.
What Shouldn’t be Included in a Prenuptial Agreement?
There are many elements of your marriage relationship which can be included in a prenuptial agreement in Ontario but there are also limitations. According to the Family Law Act, the following issues cannot be set out in a prenuptial agreement.
Matters Related to Matrimonial Home
Section 52.2 of the Ontario Family Law Act states that a prenup cannot affect the rights of each spouse to access, live, or possess the matrimonial home. Thus, each spouse can decide how they will financially divide the value of the matrimonial home, including the right of one spouse to buy out the other’s interests. However, the agreement cannot force one person out of the matrimonial home. Each side retains their right of possession. You cannot contract out of this.
Even when the home is named under one spouse, both spouses will have an equal right to remain in the property. This right can only change when there’s a court order or terms in a valid separation agreement. Otherwise, no spouse can prevent the other from accessing the matrimonial home.
Child Custody and Access
A prenuptial agreement in Ontario cannot specify most decisions related to child parenting. This is because courts must consider the child’s best interests before deciding on sensitive matters such as parenting time, child access, child support, child custody, and more.
During separation or divorce, it’s up to the court to assess all relevant factors and decide what will happen. Our experienced family lawyers will never include such clauses in a prenup because they are not valid terms.
Illegal or Immoral Provisions
You cannot add illegal or immoral provisions to a prenup. Thus, your marriage contract cannot override Ontario’s statutes and laws. For instance, a clause that requires you and your spouse to commit an offence (illegal action) cannot be of your prenuptial agreement in Ontario. There cannot be morality clauses in a prenup or “punishment” for conduct by one spouse. Cheating clauses are one example of this – you cannot get more money if your spouse is found to have cheated. Courts will invalidate such clauses.
If you need legal assistance to draft a marriage contract, separation agreement, or prenuptial agreement in Ontario, it is best to consult our knowledgeable prenuptial agreement lawyer. We will help you review all the legal aspects of this domestic contract and ensure it reflects your best interests and those of your spouse.
Why Consider Prenuptial Agreements?
Every marriage has challenges, and disagreements about financial matters are quite common. After all, spouses may have different opinions and values regarding financial planning and spending.
Separation or divorce can amplify these disagreements. This can leave one spouse or party in more financial power than the other. Luckily, prenuptial agreements can protect both spouses from such issues. Here are the reasons you should consider a prenuptial agreement.
Protect Personal and Business Assets
By the time you get married, there is a chance you will have assets such as family business, investment accounts, inheritance, retirement funds, and financial assets. What you owned before marriage is referred to as premarital assets.
Just because you entered into a marriage does not mean these possessions became marital assets. However, if you use part of these possessions to make a marriage investment or pay off a debt, it will be considered marital property.
A prenuptial agreement can protect significant assets. Considering you are legally required to disclose all significant assets when entering a marriage, you need legal and financial protection over your premarital assets if your marriage ends in separation or divorce. A valid prenuptial agreement guarantees this protection.
Prevent Spousal Support Challenges
Prenuptial agreements allow couples to address issues related to spousal support early enough. Without clear guidelines regarding spousal support, you and your partner are likely to have a hard time addressing it.
When a partner earns more than the other does, the amount payable to the spouse with lesser income can be significant. A prenuptial agreement allows you and your partner to decide on the specific amount to be paid. Some couples even waive such payments.
Indeed, prenuptial agreements add structure to the expected spousal support in the event of separation or divorce. These agreements can also reduce the need for court intervention to settle such matters.
Address Debt and Liability Issues
Once you get married, you will bring in both debts and assets. For instance, suppose you have significant debts such as student loans, mortgage payments, or credit card debts. If you are a spouse with less debt, you may not want to be responsible for paying off huge debts for your partner.
A prenuptial agreement allows you to address debts that you and your partner are likely to incur in your marriage. Our skilled and experienced lawyers can help draft prenuptial agreements that address how premarital debts will be addressed. This domestic contract will protect the spouse with lesser debt if the marriage ends in separation or divorce.
Ensure Transparency in Your Marriage
Prenuptial agreements can help improve transparency between partners or spouses. When creating such agreements, couples can easily disclose everything that matters to their marriage. For instance, they can feel free to discuss children from a previous marriage.
In the end, this higher level of transparency can save couples from issues that may arise if they have not set clear guidelines for handling various issues at the time of separation or divorce. If you want to start a marriage relationship with honesty and transparency, you may want to consider a prenuptial agreement.
Getting a Prenuptial Agreement in Ontario
If you and your future spouse plan to get a prenuptial agreement, it is recommended to obtain independent legal advice for each party. An experienced lawyer can help each party carefully assess various facets of the issues to be included in the premarital agreement.
Independent legal advice can be helpful as it allows you to make informed decisions to be included in your marriage contract. Remember, prenuptial agreements are legally binding. Therefore, working with an experienced family law lawyer is crucial.
It allows you to draft an agreement that protects your legal rights and interests related to sensitive matters such as support obligations, joint and personal bank accounts, and more. Here are the important steps you must follow to obtain a prenuptial agreement.
Know What You Need
If you want to get a prenuptial agreement, first define your financial situation. It is equally important to define the details you want to be included in the marriage contract (or what you want to achieve with the contract).
For instance, do you want to ensure the well-being of your kids, protect your business or personal assets, or ensure a better financial future? Once you determine what you need, it will become easier to create a marriage agreement. So sit with your partner and discuss what you both want to achieve with the prenuptial agreement.
Consult a Prenuptial Agreement Lawyer
Consulting an experienced lawyer when creating a prenuptial agreement is imperative to ensuring the agreement’s legal validity. Getting an online template may seem like a good option to reduce the prenuptial agreement cost. However, doing so means you are foregoing the personalized legal counsel that a professional lawyer offers.
Without legal advice for both you and your spouse, you risk having the marriage contract invalidated by the court. Thus, a prenup agreement lawyer can help tailor domestic contracts to match the legal requirements outlined in the Family Law Act.
Do not compromise on a document as important as your marriage contract. Whether you need a cohabitation agreement or a prenup, seek legal advice from M & Co. Law Firm. Our lawyers offer dependable and comprehensive prenup advice and other related services. We are here to offer the support you need to make informed decisions and ensure your peace of mind.
Financial Disclosure
Ontario’s law requires partners or spouses to provide full financial disclosure when entering into domestic contracts such as prenuptial agreements. There’s a list of precedents that set legislation whereby judges have successfully overturned any invalid marriage contract.
For instance, if one spouse fails to provide a detailed and frank financial disclosure, it is enough reason to invalidate a prenup agreement. This is the reason you should consult our experienced lawyer to ensure you are meeting all the relevant financial disclosure requirements.
After all, you do not want to be in a situation where your marriage contract is challenged or overturned in court. This can create unnecessary hassle and headaches. Further, it can lead to financial damage than if you had disclosed your financial information appropriately.
Why would you need your partner’s complete financial picture? Without it, it will be hard to negotiate some elements of prenuptial agreements, such as spousal financial support. Sure, it is tempting to trust your partner and avoid the process of preparing financial statements.
However, this can be a costly mistake if your marriage ends in divorce or separation. Full disclosure of financial information is necessary to create a valid prenup agreement. Besides, our lawyer cannot advise you about any financial entitlements without a complete picture of your spouse’s financial information.
Drafting a Prenup Agreement
As mentioned previously, drafting a prenuptial agreement involves several steps. Once your lawyer has gathered all the relevant facts and circumstances from you and your spouse, they will draft the agreement. Your lawyer must ensure the agreement is fair, reasonable, and compliant with Ontario law.
This legal document addresses the division of assets, spousal maintenance, and other financial matters. Both parties must fully disclose their financial information. Your lawyer will then review the agreement with both parties and make all necessary revisions to ensure it is acceptable legally.
Reviewing and Signing the Agreement
Reviewing and signing a prenuptial agreement is crucial to make it valid and legally binding. While one of our lawyers can draft the contract, you are not obligated to accept it as is. You can seek a second opinion from another lawyer from our law firm to ensure you understand all the legal implications.
A thorough review of a prenup agreement helps clarify its details and ensures fairness. Once you and your partner are satisfied with the terms, you can proceed to sign the document. The signing must be voluntary and make the agreement legally binding and enforceable.
Can You Create Your Marriage Contract?
You can write your prenup in Ontario. However, we usually advise our clients not to handle the entire process of writing a marriage contract on their own. Even when you can access marriage contract templates online, using them can hurt your opportunity to create a legally acceptable prenup.
Prenups must follow strict legal requirements. Failure to follow these regulations could lead to the invalidation of the entire contract. Thus, it’s best to consult our lawyers and ensure you get a carefully drafted contract that protects your interests and those of your partner.
Grounds for Prenup Invalidation
Here are the circumstances under which a judge can set aside or invalidate a prenup in Ontario.
It is not Compliant with the Law
A prenuptial agreement is a legally binding contract that should comply with Ontario’s contract law. If the court finds that some provisions are unfair or violate some laws, the agreement can be invalidated. Thus, consult an experienced lawyer to ensure your prenuptial agreement is legally binding and protects your rights.
Your Partner Does not Understand the Prenuptial Agreement
It is crucial that both spouses fully understand the prenuptial agreement and its legal implications. If a judge finds that one party did not comprehend the agreement, it can be invalidated.
Therefore, it is essential to review and understand the prenup thoroughly before signing it. This ensures you have sufficient time to consider the terms that the agreement outlines. Also, you should have a lawyer draft the agreement. A lawyer can explain all aspects clearly, ensuring you understand before signing.
Improper Disclosure of Important Financial Information
Failing to disclose financial information can lead to a prenuptial agreement invalidation by a judge. Both parties must fully disclose their assets and liabilities. Omitting information can result in agreement invalidation and other challenges.
For instance, hidden assets not covered by the prenup might be contested during divorce. Complete transparency ensures the agreement’s validity and fairness. Thus, be honest and thorough with your financial disclosures and communicate openly with your lawyer. This way, your marriage contract will protect your legal rights effectively.
Reliable Prenuptial Agreement Services
At M & Co. Law Firm, we understand that every marriage is unique. This is the reason we provide comprehensive legal advice, personalized prenuptial agreement services, and the support you need to ensure your marriage contract is legally binding. Our knowledgeable family lawyers are committed to helping you handle every step of getting a prenup agreement. Schedule a free consultation today.
