July 16, 2020
In Ontario, a “Pre-Nup” or a Pre-Nuptial Agreement is called a “Marriage Contract”. We are going to call it a Marriage contract throughout this article.
A marriage contract is an agreement signed before or after marriage that deals with how separating spouses will deal with the issues during the relationship, after separating or upon death of one person.
A marriage contract cannot set out what happens with child support, child custody (decision-making), access to the child (parenting time) or the home that the spouses live in. A marriage contract can set out what happens with the spouses’ incomes, assets and debts at separation with the exception of the home the spouses live in.
At separation, the Ontario Family Law Act will apply. You will have to divide all assets and debts gained during the marriage with your ex-spouse and there could be a support claim.
The higher income earner could owe the lower income earner spousal support. Spousal support is not automatic. The longer the relationship and the greater the difference between the spouses incomes, the more likely that the higher income earner will owe the other spousal support.
You can put in clauses waiving or limiting spousal support but you cannot waive or limit child support.
Child support is for the benefit of the child. Your child is entitled to child support, you cannot waive it. The other parent cannot waive it. Child support is mandatory in Ontario. You have an obligation to support your child.
Spousal support really varies when it comes to a Marriage contract. If you both have your own incomes and there are no children of the relationship, then your agreement to keep your incomes separate should be fine. A Marriage contract will help you there. If there are children and one spouse has reduced their income because of parenting, your attempt to keep incomes separate will not work.
To best have the contract hold up, you must give full financial information to the other well in advance of the signing of the contract and be very clear about it in the wording of the contract.
Do a Marriage contract. In a contract you have the full ability to put details in saying you keep your assets and your spouse keeps their assets. If you don’t, the law says they will be subject to equalization if you separate. You just have to watch out for a few points after you marry, one being you cannot mortgage a matrimonial home without the signature of your spouse. Even if you own it alone. The house you live in is called the matrimonial home and has special rules applied to it. Even if you owned the home before marriage, it is considered property that has special conditions. Another thing you cannot do in a Marriage contract is require a person to move out of the matrimonial home. You can limit the amount of the share in the home.
You can include clauses for all sorts of other assets.
A court can declare a marriage contract to be set aside. Your objective is to do it right and prevent that from happening. Make sure you have lots of time, at least 3-4 months when the agreement is signed, ahead of when your marriage date is. You can almost guarantee it will be set aside if you wait until the day before the wedding to get it signed. By that time, there’s too much pressure and not enough reasonable thought.
Another way to get it invalidated is by hiding things. If one of the spouses did not tell the other about their significant assets or debts existing when the contract was signed, a court can set it aside. Another sure way to have it set aside is by putting pressure one one spouse to sign, or if one person is under an impairment of some sort and not able to carefully judge what they were doing.
The best way is to have a lawyer help you do one. A lawyer has a duty to advise you on your rights under Ontario law. A lawyer cannot advise both you and your spouse though. Any lawyer who says they can do this is mistaken as it puts them in a conflict of interest position. Both spouses should obtain separate legal advice from separate lawyers. If a spouse waives his or her right to independent legal advice, he or she will have to sign a waiver but make sure they have time to get it. By waiving his or her right to independent legal advice, your spouse cannot later claim that the contract is not valid because he or she did not have legal advice as they were given opportunity to get it.
To get started on a Marriage contract, think on what you want to have happen to your assets, your spouse’s assets and any joint assets. Note that down. Then discuss what you both want to happen if one of you dies and then what happens if you separate. Talk about income sharing, if you want that, and then one of you calls one lawyer and starts the contract, making sure to give your financial information to the lawyer to protect you.
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