For most people there is nothing that can take the romance out of an engagement faster than the request for a marriage contract. Somehow marriage contracts seem inconsistent with the commitment that is the essence of marriage. However, sometimes a marriage contract may be a good idea.
A marriage contract defines rights and obligations during marriage or on separation, divorce or death. In the absence of a contract, these rights and obligations are governed by the family law legislation in effect in Ontario. Because it must be applied to many different fact situations, the legislation is not tailor-made. It also gives a lot of discretion to judges, making it quite unpredictable on occasion. Many different judges, with many different points of view, hear family law cases. Finally, the legislation can change. Ontario has had two major revisions of its family law legislation since 1978. The laws that would govern your rights if you were to divorce today may not be the laws that will govern your rights if you divorce in the future.
A marriage contract permits couples to design a tailor-made result rather than being governed by legislation. They may do this because the legislation does not seem fair to them, because it does not suit their needs or because they want to try to avoid litigation if the marriage ends. Seen in this light, marriage contracts are not cynical; they are simply a tool couples use to define and tailor their rights.
For instance…
There are many reasons to contract out of the legislation. In general terms, and subject to some important exceptions, the legislation provides that spouses jointly share their net increase in wealth from the date of marriage to the date of separation or death. If one spouse is very wealthy at the time of the marriage, the legislation could result in a windfall to the other spouse. Through a marriage contract the spouses could agree to an unequal division in the increase in wealth. This does not mean the poorer spouse gets nothing; the spouses can negotiate a fair result. For instance, they could agree that the property division would vary depending on the number of years the marriage lasts.
A couple may also wish to contract out of the property provisions of the legislation if they are both financially independent and don’t want any claim to the other’s assets, or if either spouse has children from a previous marriage. In the latter case a marriage contract can ensure that the majority of the spouses’ assets goes to his or her children and not to the second spouse. As in the first example, this does not mean that the spouse is treated unfairly; the marriage contract can balance the interests of the spouse with the interests of the children.
Marriage contracts do not need to be signed before the marriage. They can be negotiated at any time. Sometimes they actually help couples in trouble make their marriage work. If a couple has experienced troubles in their marriage they may want a marriage contract going forward. Being clear about what would happen if a relationship ends (ie. knowing you will be treated fairly) can help some couples rebuild the trust they need to stay together.
What cannot be contracted
One large advantage marriage contracts have over legislation is flexibility – they can deal with one issue or asset or many issues and all assets. With the exceptions noted below, the potential terms of a marriage contract are limited only by the imagination. However, marriage contracts cannot deal with custody of or access to children or a spouses’ rights to possession of the matrimonial home. Further, any provisions in a marriage contract relating to the support, education or moral training of a child may be disregarded by a court if it believes the provision is not in the child’s best interest.
Cohabitation agreements
The law in Ontario also recognizes cohabitation agreements. People who are living together, or who intend to live together, may enter into a contract outlining their rights and obligations during or after their cohabitation, or on death. Cohabitation agreements are often a very good idea because the law in Ontario does not do much to protect the property rights of common law spouses. If you are in a common law relationship it would probably be a very good idea to define your property rights by contract. However, these contracts must be drafted carefully because unless it provides otherwise, a cohabitation agreement becomes a marriage contract if the parties marry each other.
In short, if your partner proposes a marriage contract or a cohabitation agreement don’t assume it means they don’t love you as much as they should. There are lots of times such contracts make sense. In fact, you may want to consider one yourself.
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Ingrid van Weert is a compassionate and dedicated family lawyer with extensive experience in both divorce law and in all forms of dispute resolution available in the divorce process – negotiation, mediation, arbitration and litigation. She can be reached at ingrid@ontariodivorcelaw.ca or at 416-214-1501.
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September 22nd, 2009 at 3:48 am
Very timely and informative. Thanks for sharing this.