Too often, engaged couples dismiss the idea of having a “prenuptial agreement” or “marriage contract” because they associate it with conflict and mistrust. Of course, a prenup is valuable if a marriage ends, but it can also be a tool in helping to clarify goals and expectations.
For some people, the process of creating a prenup could make their union even stronger.
Possible Benefits of a prenup
While one purpose of a marriage contract is to protect individuals in the event of a divorce, it can also help Ontario couples fortify the foundation upon which they build their marriage. A prenup can do this in the following ways:
- Talking about your finances before marriage might prevent unfortunate surprises that people discover later on.
- Having an honest, open conversation about money can help parties build valuable communication skills.
- Monetary discussions can help parties understand each other’s financial views and habits.
- Assigning ownership and ultimate treatment of separate assets and debts can protect individuals from each other’s financial missteps.
- Separating property can protect it for the purposes of leaving an inheritance to a child from a previous relationship.
- Creating a legal agreement can ease the concerns of family members and business partners who have a stake in your assets.
As you can see, both the contract itself and the process of creating the contract can have benefits.
Ensuring an agreement is effective
A marriage contract can only be effective if it is valid and enforceable. Therefore, if you are contemplating marriage, now could be a good time to consult a lawyer to discuss your options and ensure that the agreement you will secure has a decent chance of being legally sound.
A marriage contract must be in writing, signed by both sides, and duly witnessed. The negotiation process must be buttressed with accurate financial disclosure evidenced in writing, and there must be adequate time for both to have their lawyers negotiate and draft calmly – absent any pressure, undue influence or duress from anyone. The ultimate product must be fair to each party – both now and in light of events that could unfold into the future (such as children, illness, financial setbacks, etc.). So you can see that these things can take a bit of time to finalize. The marriage contract should be free from illegal clauses. If a prenup does not meet these standards, it can be subject to later contest and ultimately be set aside by the courts.
We have talked about marriage contracts in this blog post. Unmarried couples can enter into a “Cohabitation Agreement”. The same principles would apply.
It can be uncomfortable for Ontario couples to discuss financial matters and property rights before marriage. However, doing so in a frank and fair manner can potentially have long-lasting benefits for you.