The Importance of Prenuptial Agreements

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Prenuptial Agreements 

A prenuptial agreement, antenuptial agreement, or premarital agreement (commonly referred to as a prenup) is a written contract entered into by a couple before marriage or a civil union that enables them to select and control many of the legal rights they acquire upon marrying, and what happens when their marriage eventually ends by death or divorce. Couples enter into a written prenuptial agreement to supersede many of the default marital laws that would otherwise apply in the event of divorce, such as the laws that govern the division of property, retirement benefits, savings, and the right to seek alimony (spousal support) with agreed-upon terms that provide certainty and clarify their marital rights. A premarital agreement may also contain waivers of a surviving spouse’s right to claim an elective share of the estate of the deceased spouse.


Prenuptial agreements in some countries, including the United States, Belgium, and the Netherlands, the prenuptial agreement not only provides for what happens in the event of a divorce but also protects some property during the marriage, for instance in case of bankruptcy. Many countries, including Canada, France, Italy, and Germany, have matrimonial regimes, in addition to, or in some cases, instead of prenuptial agreements.


Canada Prenuptial agreements

Prenuptial agreements in Canada are governed by provincial legislation. Each province and territory in Canada recognize prenuptial agreements. For instance, in Ontario, prenuptial agreements are called marriage contracts and they are recognized by section 52 of the Family Law Act.


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.


The agreements must be in writing, signed by the parties and witnessed. They may deal with a broad range of matters, including the ownership or division of property, support obligations, matters concerning the education and “moral training” of children (but not issues concerning custody of or access to children) and “any other matter.” The legislation precludes spouses from opting out of those provisions in the Act that protect the rights of each of spouses to the matrimonial home.


The Family Law Act provides that a court may set aside a provision for support or a waiver of the right to support in a marriage contract and may determine and order support even though the contract contains an express provision excluding the application of this section:


1.If the provision for support or the waiver of the right to support results in unconscionable circumstances;


2.If the provision for support is in favor of, or the waiver is by or on behalf of, a dependant who qualifies for allowance for support out of public money;


3.If there is default in the payment of support under the contract or agreement at the time the application is made.


Even as to assets, prenuptial agreements are not insurmountable. A Canadian court might modify or even ignore an agreement in some circumstances, such as if an unforeseen financially disabling or devastating event has occurred. Most Canadian provinces provide for judicial oversight of prenuptial agreements but the standard of judicial review varies from province to province. For example:


-Ontario’s Family Law Act permits a court to set aside a prenuptial agreement or any portion thereof if a party failed to disclose significant assets or liabilities, if a party did not understand the nature or consequences of the contract, or otherwise, in accordance with the law of contract. Family Law Act, R.S.O. 1990, Ch. F.3., Sec. 56(4).


Premarital mediation

Premarital mediation is an alternative way of creating a prenuptial agreement. In this process, a mediator facilitates an open discussion between the couple about all kinds of marital issues, like expectations about working after children are born and saving and spending styles as well as the traditional premarital discussions about property division and spousal support if the marriage is terminated. The engaged couple makes all of the decisions about what would happen in the event of a separation or divorce with the assistance of the mediator. They then draft either a deal memo or a premarital agreement and have it reviewed by their respective attorneys. An agreement developed via mediation is typically less expensive. After all, fewer hours are spent with attorneys because the couple has made all of the decisions together, rather than one side vs the other.