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Don’t Fall Into a Trap: Marriage Contracts

A marriage contract is one of the three types of domestic contracts as set out in the Family Law Act in the Province of Ontario.  A marriage contract is similar in concept to a “pre-nuptial agreement” or, “prenup”, as it is called in the United States.  A marriage contract can be entered into prior to marriage or at any time before the marriage breaks down.  Marriage contracts must be in writing, signed and witnessed for it to be formally valid and recognized as a domestic contract.

The law in Ontario dictates how support and property will be dealt with if your marriage ends.  If a couple would like to make other arrangements that suit their situation, they could negotiate terms of a marriage contract that would then dictate how spousal support and property will be dealt with should their marriage end.

Among other specifics, a marriage contract can cover ownership or division of property, spousal support obligations or a spousal support release.  This is particularly useful if one or both parties have assets, family trusts and even debts that they wish to exclude from division with the other party upon separation.

The contract cannot include clauses regarding the custody of or access to current or future children, as the legal test in this regard is what is in the child’s or children’s best interests at the time of separation.  A marriage contract cannot override the law with respect to child support.  One item that has special rules within the law is the matrimonial home (the home(s) that you and/or the other party owns and resides in at the date of separation) – it is best to consult with a lawyer to understand these rules.

It is important to note that a marriage contract can be set aside by a Court under certain circumstances.  One of the most common grounds to set aside a marriage contract is if one party fails to disclose a significant asset or debt that existed at the time that the contract was formed.  Failure to make full, complete and honest financial disclosure before the marriage contract is signed can render it unenforceable.  Another common ground to set aside a marriage contract is if one party did not understand the nature and consequences of the agreement.  This can be avoided if both parties obtain independent legal advice (advice from two separate lawyers who will act in each of their respective client’s best interests) to understand their rights and obligations under the contact.  The marriage contract could also be set aside if one party signed the contract under duress or fraud.

Marriage contracts can be tricky.  There are many traps and pitfalls which could render the marriage contract unenforceable if not properly drafted and if the requisite steps are not taken.  Before preparing and/or signing a marriage contract, it is advisable to seek legal advice to ensure that the contract will stand up should it be the subject of any future challenge.

Are you looking for information about marriage contracts? Please contact Gelman & Associates to book your personal consultation.

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