Prenuptial agreements are enforceable in Canada. Courts in Ontario and other common law provinces of Canada previously considered marriage contracts to be contrary to public policy and unenforceable, but the 1978 Family Law Reform Act (now continued in the Family Law Act) specifically authorizes marriage contracts. Sometimes called a “pre-nup,” it is often disparaged because some people say it coldly takes the romance out of a pending marriage and assumes the couple will end up divorcing.
While you may know the word prenup from TV and Hollywood movies the term is an American one. In Canada, and Ontario in particular, prenups are called domestic contracts. Domestic contracts cover both marriage contacts and cohabitation agreements and act in a similar way to the American prenup. Both are used to organize a couple’s finances, clarify their rights and responsibilities in relation to one another and govern the division of property should they decide to part ways.
A marriage contract is a voluntary agreement between two parties who are planning to marry or are already married, which sets out how certain matters will be dealt with should the marriage break down. This type of agreement is most often entered into prior to the marriage (referred to as a prenuptial agreement or ‘prenup’) and is a good idea for couples who want to outline, in advance, what will happen to each partner’s assets and finances in the event of a divorce.
There are several different types of agreements related to marriage. The main contract is the marriage contract itself, which is your agreement to marry your spouse. Other agreements that married persons may enter into include:
Prenuptial agreements are gaining in popularity for a variety of reasons. One reason is that people today are focusing on their careers and delaying marriage. By the time they do marry, both partners have property and financial worth to protect. Prenuptial agreements make this easy to do.
A postnuptial agreement is basically a prenuptial agreement, only you sign the dotted line after you have married. So, yes, it’s a contract in which you and your spouse will decide how to split up your assets in the event of a divorce.
Sometimes the separation agreement is a binding contract between you and your spouse. Sometimes it is not binding until the judge approves it and includes it in the divorce judgment. It all depends on what you and your spouse put in the separation agreement.
Marriage contracts are particularly relevant in certain situations, including when one spouse has an interest in a family business where keeping the business in the family is key, or in blended family situations, where spouses have been previously married or are cohabiting and have children from prior relationships.
In Ontario, without a contract, spouses will be subject to the equalization of property regime imposed by the Family Law Act (FLA) for most family property, as well as applicable spousal support rules.
The Act can have ramifications far beyond the happy couple. Those in business with partners or holding sensitive minority positions in companies may find that the Act’s tentacles could grasp hold of them.
As divorce and remarriage have become more prevalent, and with more equality between the sexes, courts and legislatures are increasingly willing to uphold premarital agreements. Today, every state permits them, although a prenup that is judged unfair or otherwise fails to meet state requirements will still be set aside.
The greatest problem in most divorces is deciding how to divide property and money. Many prenuptial agreements are entered into simply because couples do not want the courts to decide on asset distribution should the marriage end.
Putting together a prenuptial agreement that’s fair for both parties isn’t something the average person can do with ease. Prenups are legal contracts, which is why they so often require the knowledge of an experienced family lawyer. Whether you are considering getting married, remarried after a divorce, or living common-law, many couples now seek legal advice and often enter into pre-nups (marriage contracts) or cohabitation agreements, which set out what will happen should the relationship fail. It is advisable to get the legal help that’s right for you.
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