What is a Modern Marriage Contract?
A prenuptial or post-nuptial agreement is a legally binding contract entered into either prior to marriage or after married. These agreements can be referred to as Domestic Contracts or a Marriage Contract, and sometimes are referred to as an antenuptial agreement. Generally speaking, when couples sign a written contract prior to marriage it is known as a prenuptial agreement; when the contract is signed after the marriage, it is a Marriage Contract. That being said, often the terms are used interchangeably.
A Modern Marriage Contract provides a private, custom-made set of rules for dividing the couple’s property in the event of a separation, divorce, or death. In some instances, a Marriage Contract overlaps many functions with a Will. A Cohabitation Agreement is virtually the same thing as a Marriage Contract; however, it is designed for those who are living together—or intend to live together. A Cohabitation Agreement usually automatically converts into a binding Marriage Contract should the couple later marry. Not only does a Modern Marriage Contract or Cohabitation Agreement establish rules for how the couple manages their day-to-day marriage, it also provides an outline for how assets will be divided in the event of divorce, separation, or death.
Marriage in every Canadian province creates an economic partnership. The fruits of that economic partnership are to be divided between the spouses should they separate and divorce—unless otherwise agreed to in a marriage contract. The Marriage Contract allows a couple to opt out of provincial law regarding property, however, must follow these rules:
- The Contract must be in writing.
- The Contract must be signed by both parties.
- The signatures on the Contract must be witnessed.
- There must have been honesty and full disclosure in the negotiations that led up to a Marriage Contract.
- A Marriage Contract cannot deal with custody of or access to children, as those issues must be determined at the time of the separation, based on the best interests of the children.
- The terms of the Marriage Contract must not generate an unconscionable financial result.
- A Marriage Contract can be set aside if it is determined that there is no independent legal advice for both parties, or if there was not proper financial disclosure.
What Can a Modern Marriage Contract Address?
- Division of Assets—Absent a Marriage Contract, Canadian law “equalizes” assets between spouses—although there are crucial exceptions. Assets are not necessarily divided fifty-fifty, determining legal ownership is extremely important, a matrimonial home owned on the date of the marriage will have its entire value divided, and gifts or inheritances received after the date of the marriage are excluded from calculations. When a Marriage Contract is in place, the details of the Contract will take precedence, so long as it was legally and properly prepared. One of the most common property provisions in a Marriage Contract relates to the matrimonial home to ensure the date of marriage credit is not lost. Of significance is the fact that a Marriage Contract cannot put any limits on the rights of either party to occupy the matrimonial home.
- Business Assets, Property, and Debts—The Marriage Contract can dictate which spouse is entitled to which properties (including business assets) as well as which spouse is responsible for marital debts. If there is no Marriage Contract, then the spouse who incurred the debt is responsible for it, and spouses who incur joint debts are jointly responsible for the full debt. If there is an asset associated with debt, the debt follows the asset—the spouse who receives the car, also receives the car loan. In the event that one spouse comes into the marriage with a business, then the other spouse works for the good of the business during the marriage, a Marriage Contract might need to be redone to be fair to both spouses.
- Spousal Support—While a Marriage Contract can dictate whether a spouse will receive spousal support, and how much the spouse will receive, if the couple’s finances have changed significantly from the time of the marriage, and if one spouse would be left in a destitute position under the terms of the Marriage Contract, then it could be set aside.
- Parenting Style Decisions, Parenting Plans, Child Support—Under Canadian law, Marriage Contracts may not include provisions that attempt to govern custody and access. That being said, a Marriage Contract can contain certain provisions that affect children, particularly children of prior marriages or relationships. Marriage Contracts can also provide couples with an opportunity to set out their understanding regarding the educational, moral, and religious upbringing of their children.
At M&Co Law, we know that property division, spousal support, and the division of debts can be touchy issues during a divorce. When there is a Modern Marriage Contract in place, these issues are much less likely to be contentious. We can prepare a Modern Marriage Contract on your behalf, look at an existing Marriage Contract, making changes when appropriate, or we can help you determine if your Marriage Contract is legally binding, in light of major changes throughout your marriage. No matter how challenging the dynamics of your relationship, we can help you determine the smoothest process to resolve divorce issues and move on with your life. Contact M&Co Law today for experienced, knowledgeable, highly skilled legal assistance on all family law issues.
