Saying, “I Do,” to your partner on your wedding day will be one of the most joyous moments of your life. Together you have agreed to embark on a new journey, and the adventure of marriage awaits.
Leading up to your wedding day, it is important to have an honest and long discussion with your partner to communicate the expectations for your future, including the benefits of a marriage contract.
A marriage contract is a type of “domestic contract” under the Ontario Family Law Act which can modify the default statutory regime of marital property division and spousal support under the relevant Ontario marital statutes.
Coming into a marriage, each party may have existing assets such as business interests, real estate, pension, securities, family inheritances, and valuable personal items. Either party may also have significant financial obligations to banks, arm’s-length and non-arm’s-length 3rd parties, and businesses which could affect the other spouse during the marriage and after separation. It is also common for some soon-to-be-weds to tie the knot with legal and financial obligations from their previous separation.
A marriage contract and attendant financial disclosure not only reveals these legal or financial obligations, it can set out in detail how these assets and obligations affect the other spouse in the event of a separation, often years and decades in the future.
A marriage contract sets the expectations for both parties should the marriage ends in divorce. The mutually-agreed-upon marriage contract can outline how marital assets, pre-marital assets, personal debts, business debts, family gifts, inheritances, and business interests will be divided in the event of separation. It is strongly recommended that each party have a separate family lawyer to draft and review the contract, as well as provide each other with full and frank financial disclosure to outline each other’s financial landscape prior to the marriage. All of this should be done well in advance of the planned wedding date to allow each party time to honestly consult a family lawyer and carefully review their respective financial position.
So long as the circumstances around the formation of the marriage contract were fair and the parties met the legal requirements of a valid domestic contract (e.g. having independent legal advice, absence of duress, and providing full and frank financial disclosure), courts do uphold the agreement the parties entered into.
To summarize, the marriage contract offers soon-to-be spouses with peace of mind through clear knowledge and understanding of their respective financial and legal obligations on separation and what would happen to their assets and liabilities at separation. It can be used as evidence of the parties’ intentions and the “bargain struck” before the marriage if and when a post-separation dispute arises over an area governed by the contract.
Without a legally-enforceable marriage contract, many separated spouses often find themselves in court for years engaging in costly and stressful court battles over assets and spousal support. All of which can be minimized or even avoided when there is a legally-enforceable marriage contract.
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Disclaimer: The information contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. Readers should seek tailored legal advice in relation to their personal circumstances.