What Is A Prenuptial Agreement?

June 6, 2018   |   Tanya Davies   |   blog
Prenuptial Agreement
Prenuptial Agreement

What Is A Prenuptial Agreement?

A prenuptial agreement is a legally binding contract that outlines some basic direction for the financial affairs of a couple as well as defines other details such as schooling for the children in case of the parties’ separation. While the secondary elements are not typically enforceable, they still help to eliminate conflict if set out in advance of a marriage. This agreement is recommended for any couple entering into a marriage or intending to live together as it can help avoid conflict upon separation. It will serve as a framework for the division of assets, should the relationship ever dissolve at a later date. The Family Law Act stipulates what can be included in this document, which needs to be drafted by a prenuptial agreement lawyer. While the negotiations around a prenuptial agreement may be difficult to have, they are critical and will protect both parties from future disagreements. It will not only make a separation easier if it ever occurs, it will give both parties the peace of mind that their affairs are in order.

Who Needs A Prenuptial Agreement?

People entering a second marriage – A prenuptial agreement will clearly outline any obligations the parties have from the first marriage and may isolate certain assets needed to meet these obligations.

People with a will or estate plan – In most cases the Will or other financial plan can be impacted by a prenuptial agreement and should be disclosed prior to drafting the agreement.

Anyone with significant assets before a marriage – This is the most common reason for a prenuptial agreement and is usually applied to situations where extensive property or business assets are involved. A prenuptial agreement lawyer will structure the contract in such a way that it will protect these assets, if necessary, upon separation.

Before entering into a cohabitation relationship – In Ontario a lengthy cohabitation is treated very similar to a marriage when a separation occurs. A prenuptial agreement is important to make sure both parties understand the asset division if the living arrangement changes.

People who are sole providers to elderly parents – Providing support for elderly parents can have a financial impact on any couple’s budget. A prenuptial agreement lawyer can ensure that these funds are excluded from your ex-partner’s claim upon separation in order for the support to your parents to continue.

Do The Parties Need to Be Married?

The answer is No. Even though a prenuptial agreement is usually recommended before a marriage, it can also apply to other situations. The Family Law Act in Ontario defines the term “spouse” in two different ways and both apply to a prenuptial agreement differently. The first definition is the more traditional one where there is a legal marriage between the two parties. The second situation involves a slightly looser definition and applies to couples that have lived together for at least three years or have a child together. A competent prenuptial agreement lawyer can help you understand which of these definitions may apply to your situation and how it should be properly addressed in the agreement.

Many people never even realize that sharing a home with someone for a length of time can have legal implications as it changes the relationship. This cohabitation adds a sense of permanence to the relationship that might provide entitlement to the division of assets under the law. This is why consulting a prenuptial agreement lawyer is so important prior to making changes to your living arrangements.

Terms of the Agreement

A prenuptial agreement is a very flexible document that can contain details for division of almost any asset owned by the parties. This typically includes property and financial instruments, such as investments or trusts. It can also address spousal support payments. The agreement may also include language that details the educational direction for the children of the family. These prenuptial agreements can be as individual as the family creating them and the most sensible approach would be to retain the services of a marriage agreement lawyer in the Ottawa area to draft the agreement for you. The lawyer will include proper protection clauses that you might not have considered or would not know how to draft on your own.

Legal Validity of a Prenuptial Agreement

The Family Law Act recognizes the validity of a prenuptial agreement as a legally binding document once properly executed. A well- drafted agreement can withstand the challenge of its validity and be upheld by the court as binding. Certain criteria need to be met for the agreement to be enforceable. These include:

A full and proper disclosure of all assets, debts and other encumbrances;
Both parties having access to legal counsel;The document must be in writing and signed and witnessed by the lawyer with a certificate of independent legal advice;Permissible matters and terms;Both parties must have equal bargaining power.

Marriage agreement lawyers are skilled in crafting these documents to your individual situation and can ensure these criteria are met and the document is valid. Ontario has very specific guidelines as to what terms can be included in the prenuptial agreement. As a result, it is essential to find an experienced lawyer in order to avoid potential challenges to the agreement later on. Even though these agreements are usually upheld by the courts, improper legal terminology in the prenuptial agreement may expose the contract to potential problems.

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