Prenuptial agreements, which are called marriage contracts or domestic contracts in Canada, are legal contracts that guide how specific terms of a divorce will be resolved in the event that the marriage does end that way. Prenuptial agreements are executed – or entered into – upon marriage, but this is not the end of the matter. A couple who is already married can also enter into a contract that addresses divorce-related matters, which means that, yes, you can have a prenup after marriage, and it is generally called a postnuptial agreement or postnup. If you are considering a postnuptial agreement or have been asked to sign one, don’t wait to reach out to an experienced Toronto divorce lawyer for the professional legal guidance you are looking for.
The Divorce Rate in Canada
Statistics Canada shares some positive news when it comes to divorce in Canada, including the following:
- The number of divorces throughout Canada in 2020 was lower than for any other year since 1973.
- Divorce rates for younger couples have been declining across the country since about 2005.
- Canada had lower divorce rates than all but one of the G7 countries in 2019 and had a rate that was 44 percent lower than the United States, which topped the charts.
This is all good news for Canadian marriages, but the fact remains that somewhere around 40 percent of all marriages in the country end in divorce, and ignoring the issue may be to your detriment.
Are Postnuptial Agreements Binding?
In Canada, postnuptial agreements are legally binding when they are in accordance with the nation’s contract law, but there is more to the matter than just this. These contracts executed by spouses cannot override the law, which means they are binding unless the court exercises its considerable discretion and determines that the postnup – or a term included in the postnup – is invalid. Because postnuptial agreements are created and implemented inside the marriage, courts take special care in the determination of their validity. The reason for this is that, prior to your marriage, you and your soon-to-be spouse had no unique legal rights or obligations between you, and as such, neither of you theoretically gave up anything by entering into a prenuptial contract.
Upon your marriage, however, you and your spouse are both imbued with rights and obligations that are determined and governed by the Family Law Act. This means that if you do execute a postnuptial agreement, at least one of you is likely to be deprived of a legal right that already belongs to you. While this is not strictly forbidden, the court is more cautious when it comes to the terms included in a postnuptial agreement and the contract’s overall validity – in comparison to a prenup. In other words, while you certainly can have a prenup after marriage – also known as a postnup – having professional legal guidance in your corner is well advised.
The Terms Addressed
While every postnuptial agreement is unique to the couple and circumstances involved, there are specific terms that tend to be addressed, including:
- The division of marital property and debts upon divorce
- The terms of spousal support (as applicable)
- How assets will be passed upon the death of either spouse
Your Postnuptial Agreement Must Be Fair
Ultimately, in order for your postnuptial agreement to hold, it must be fair to both parties, and in order to meet this benchmark, there are three primary considerations.
Each Party’s Needs
In order for your postnup to be found fair, it must include provisions that address you and your spouse’s housing and financial needs. These needs must be addressed in terms of multiple factors, such as each party’s earning capacity, age, the current standard of living achieved, and beyond.
Each Party’s Fair Compensation
Once you and your spouse’s financial needs are met, the matter of fairly compensating each of you in relation to your individual responsibilities within the marriage, for example, if one of you gave up your own career to stay home with the children – in support of the other growing their career – the court may deem that the financially less well off spouse be awarded compensation in the form of marital property or spousal support.
Sharing between Parties
Marriage is nothing in the eyes of the law if not a partnership, and in a partnership, each party is legally entitled to an equal share of the involved assets unless there is a significant reason for ruling otherwise. The distinction between marital and nonmarital property that belongs to one spouse at the time of the marriage is a prime example of such a reason.
Ultimately, if your postnuptial agreement includes terms that the court may have adopted in the application of legal rules and regulations, it is very likely that your marital contract will be upheld.
Guidelines
When assessing whether or not a prenuptial or postnuptial agreement is fair, the Court will consider including:
- The agreement cannot impede the reasonable requirements of any children involved.
- There is nothing inherently unfair about attempting to protect non-matrimonial assets, including anticipated assets, such as inheritances.
- The autonomy of the spouses involved must be respected – as long as the resulting terms are not outside the law’s boundaries. In other words, the court cannot impose its own terms based on the belief that it knows best.
- Generally, the longer a couple is married after a postnuptial agreement is executed, the greater the possibility that it may be deemed unfair – due to unforeseen changes in circumstance.
Circumstances that are likely to be deemed unfair include:
- The postnup leaves one spouse in real financial need while the other is favourably provided for. The disparity must be significant.
- The postnup leaves one spouse with a valid argument regarding an aspect of compensation, such as for lost earning potential
- The postnup fails to adequately cover both spouses’ needs and just compensation.
The Elements of a Valid Postnup
In order for your postnup to be considered valid, it must meet specific qualifying criteria that include:
- The contract must align with contractual laws.
- The contract must have been validly executed.
- Both parties must have received straightforward disclosures from one another regarding the complete range of each party’s assets and debts.
- Both parties must have received adequate legal advice prior to signing.
Additionally, your postnup must be in writing, must be signed by both of you, and must be witnessed. Further, while your postnup can address any matter you choose, terms that attempt to guide custody, guide access to your shared children, or limit one spouse’s right to maintain possession of the family home are not enforceable. Finally, the court can set aside or invalidate a postnup for any of the following reasons:
- One party failed to disclose personal assets or debts.
- One party failed to fully comprehend the nature or the consequences of the contract as signed.
- The postnup was not created in accordance with Canada’s contract laws.
Don’t Wait to Consult with an Experienced Toronto Divorce Lawyer
If you have questions or concerns that relate to postnuptial agreements – or if your spouse has asked you to sign one – there are a wide range of factors to take into consideration, which makes having a trusted divorce lawyer on your side paramount. Because the terms included in your postnup can significantly affect your future, the practiced Toronto divorce lawyers at M&Co Law focus the full force of their impressive experience on skilfully advocating for the legal rights and best interests of each of our clients – in both the execution and the application of postnuptial agreements. We’re on your side and here to help, so please don’t wait to contact or call us at416.862.0980 or email us at admin@mlawgroup.ca for more information today.
