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Overview of Marriage Agreement

Overview of Marriage Agreement

 

What is this document?

A Marriage Agreement is an agreement entered into by a married couple, or two people intending to marry on a specified date.

 

When would I use this document?

A married couple or to-be-married couple would enter into a Marriage Agreement when they wish to deal with the possibility of a breakdown of the relationship, and wish to provide for rules governing spousal support and/or property that are different from the laws otherwise applicable to them.

 

Who signs this Agreement?

The spouses or to-be spouses will sign a Marriage Agreement.

 

More details about this document

A Marriage Agreement is sometimes also known as a Pre-Nuptial Agreement if the couple enters into the agreement before the date of marriage. Marriage agreements can vary greatly in length, depending on the number of assets dealt with in the agreement, and the number of topics covered in the agreement. Some agreements can be very biased in favour of the spouse with the most bargaining power.

Before signing a Marriage Agreement, both parties must confirm that they have received independent legal advice from a lawyer.

A ‘breakdown of the relationship’ may include divorce, separation or death of one of the parties.

Key items that are determined in a Marriage Agreement include: who owns the matrimonial home in the event of a breakdown of marriage; whether one spouse will pay spousal support to the other spouse in the event of a breakdown of marriage; how much spousal support will be paid; the division of the spouses’ other assets; the division of the spouses’ liabilities; and whether the applicable legal scheme of property division will apply.

Parties should be aware that the courts can set aside the terms of a marriage contract for equitable (fairness) or public policy reasons, and that the courts reserve the right to determine what is in the best interests of any children of the marriage. If a couple is in doubt about whether their agreement is enforceable, they should consult a family law expert in the jurisdiction where they live.  

 

What are the core elements of this document?

The core elements of a Marriage Agreement include: Property; Spousal Support; Date of Marriage Home; Debts and Liabilities; Independent Legal Advice; and Dispute Resolution.

Some additional clauses may include: Children; Review of Agreement; and Rights on Death.

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Gramma Might Need a Prenup Too

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This article considers the not uncommon situation where a senior falls in love with another senior and decides to marry. Both spouses have accumulated assets and have children. One or both may have divorced a spouse and have children and stepchildren. Both have families with financial expectations in relation to the property accumulated during the lifetime of their parents, and one or both prospective spouses may have interests in a family business. To complicate matters, both prospective spouses know that they will be responsible for the expenses of caring for the other spouse as their physical needs increase: assisted living, nursing homes, medications and assistive devices and therapies. Both spouses know that these expenses will come sooner than later. How can the prospective spouses ensure that their financial affairs will be predictable and not disrupt the family?

A prenuptial agreement (marriage contract) can help alleviate many family concerns by having each of the parties waive all rights to inherit a spouse’s property. In addition, the parties can waive any obligation to split assets in the event of divorce, and they can waive the right to spousal support. The agreement can also detail who will be responsible for paying what costs — such as assisted living or nursing home fees.

The spouses would be prudent to review their wills and estate planning instruments to ensure that everything has been properly disclosed to the other spouse, and to ensure that the marriage contract, wills, estate planning instruments etc. are consistent with the parties’ wishes.

Read the article here.

Take away:

  • Planning is necessary at any age when entering into a cohabitation or marriage agreement. It is even more important for older couples who have accumulated more assets, have more children with expectations, may have interests in family businesses, and who are facing significant increases in (health) care costs in the not so distant future.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Is a Waiver a Good Strategy to Protect a Family Business from Marital Breakup?

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If a spouse operates or owns a family business, one strategy to protect that business would be to enter into a marriage contract that contains a waiver by the non-owner spouse of the owner spouse’s interest in the business, whether the business was owned prior to marriage, or whether it is anticipated that one spouse will take over the family business in the future. The contract can also include a waiver of any claim for the future increase in value of the business over the course of the marriage.

Two important considerations involved in drafting a waiver include: (a) the business owner must provide full financial disclosure to the non-owner spouse regarding the business’ present value and its future value if known, and (b) each party must receive independent legal advice. The financial disclosure needs to include the current value of the business, and any future value (if known). It may be necessary to consult a business valuator, depending on the size of the business.

Read the article here.

Take away:

  • To ensure that there has been a full disclosure of the value of a business interest at the time of the signing of a waiver in a marriage contract, it may be prudent to consult a business valuator.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Marriage Contracts and Child Support

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Parties to a marriage contract cannot waive their obligations to provide support for their own children. However, if your spouse has brought children from a previous relationship into the marriage, you may wish to consider a provision in your marriage contract (assuming you have one – and this may provide an incentive to enter into one) that specifies that “under no circumstances will you stand in place of a parent to these children and will not be required to pay child support to them in the event of the breakdown of your marriage. ” The reason for this is that you don’t have to be a biological parent in order to be required to pay child support. As long as you have treated the children as your own (or stood in place of a parent), you may end up being required to support them.

As with all marriage contracts, the parties must receive independent legal advice. It is very important that each spouse receive this advice in a language which they can understand and which permits them to both receive a full explanation of the effects of the terms of the agreement, and to ask questions about the agreement.

This is especially important if any rights or obligations are waived in the agreement.

Read the article here.

 

Take away:

  • While parties cannot contract out of the responsibility to support their own children, they can agree on support obligations for children brought into the marriage from a previous relationship.
  • Both parties should receive independent legal advice, in a language that allows them to appreciate the meaning of the terms of the contract.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Was the Marriage Contract Signed under Duress?

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The article discusses the high profile case of McCain v. McCain (currently on appeal to the ONCA). After 15 years of marriage, the spouses entered into a marriage contract under which the wife waived her equalization and support rights. The husband’s father was prepared to disinherit him if the agreement was not signed. After 30 years of marriage and 5 children the couple separated. The wife was left with a $7 million settlement, and all property in her name – a house and 2 cottages which were all heavily mortgaged (by the husband). The husband was worth $500 million at the time of separation.

Waivers of any rights in a marriage contract may be considered unenforceable by a court under the Ontario Family Law Act if (1) one spouse did not provide full and proper financial disclosure to the other regarding assets, income and debts (including their values); (2) one spouse did not understand the nature or consequences of the contract (e.g., each spouse should have proper independent legal advice prior to signing); or (3) the contract or the making of it somehow offends contract law rules (such as the presence of fraud, duress, undue influence or unconscionability) .

In an interim order, the Court found that the contract was entered into under duress, and posed the question: “How could [she] have possibly refused to sign under those circumstances?” The wife was awarded $175,000 per month in spousal support – the highest amount ever awarded by a Canadian court. The decision will be appealed to the Ontario Court of Appeal.

This case is a reminder that the process of entering into a marriage contract is extremely important.

If the circumstances are such that one spouse, to their detriment, had no real choice but to enter into the agreement, a later challenge by that spouse of the enforceability of a waiver of equalization rights and/or spousal support clause may be successful.

Read the article here.

 

Take away:

  • If one of the parties to the marriage contract “had no real choice but to sign”, that party might succeed (often years later) in challenging the enforceability of a waiver of spousal support and equalization rights. This will be especially likely if the wealthier spouse was too ‘greedy’ and the contract is so one sided that it does not even come close to what the other spouse would have received under the statutory regime.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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The Marriage Contract is a Couple’s Self-Made Law

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In Ontario, there is a default statutory regime that governs matrimonial property. However, if a couple preparing to wed or an already married couple wishes to avoid the default statutory regime, the couple may opt out of the regime by signing a marriage contract in which the couple shapes its own rights regarding property division.

This article is about marriage contracts in Ontario. The relevant legislation establishes a default regime that deals with matrimonial property at the breakdown of marriage. This default regime automatically applies to all couples unless the couple decides to opt out by signing a marriage contract. Once a marriage contract is signed, it will, for the most part, replace the property division provisions of the relevant legislation. However, it is important to note that the relevant legislation will still govern the marriage contract itself. For example, the legislation may allow courts to set aside marriage contracts if there is evidence that there was improper financial disclosure; one of the parties did not understand the nature and consequences of the contract; or if there is evidence of fraud, duress or undue influence when entering into the marriage contract.

Read the article here.

Take away:

  • Prior to getting married, it would be prudent to review and understand the applicable statutory regime to understand how property will be divided upon marital breakdown. If the couple believes the statutory regime does not suit their needs, they can consider entering into a marriage contract.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

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No Marriage Contract: a $60 Million Mistake for Gwen Stefani?

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Read the article here.

A marriage contract can save grief and tension between two splitting parties. By outlining the terms, prior to the dissolution of the relationship, and before the relationship/marriage begins, both parties will be very aware of the division of assets should the marriage fail.

By not signing a marriage contract/prenup, Gwen Stefani will be subject to court proceedings to determine the amount of money that will be given to her ex. His claim is that he should be compensated for being a stay-at-home dad and this could amount to more than half of her assets. A marriage contract outlining support terms would have helped this tension and protected the assets that she was bringing into the relationship.

Read the article here.

Take away:

  • Parties who enter marriage with substantial assets should consider a carefully drafted marriage contract.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

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Trending: Ins and Outs of a Pre-Nup

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Read the article here.

The idea of creating a prenuptial marriage contract may sound unromantic but it is an idea that is quickly becoming quite common. The article draws an analogy between a seat belt and a marriage contract – you put one in place and hope you will never need it, but if you do, you’re glad it is there. At the very least, a discussion about a ‘love contract’ can help a couple communicate clearly about their financial situation, their financial goals and their approach to topics such as savings, spending, and debt. This can be an important preparation for marriage, since most marital disagreements are about finances.

In preparation for this discussion, and especially if the couple does not enter into a marriage contract, the article recommends making photocopies (or printouts) of all financial records (eg. bank accounts, investments, retirement, savings, loans etc), and establishing new savings and retirement plans for post-marriage monies. Keeping track of any payments made on a spouse’s debt is also recommended. At a minimum, three steps to create an enforceable marriage contract include: (a) don’t wait until the last minute to draft or sign a prenup as duress and stress close to the wedding date may invalidate the agreement; (b) be sure to hire separate representation for each party (paid for by each party separately); (c) beware of including penalties for fault (eg.

$50,000 for adultery) which may offend public policy, because divorce laws are now based on the public policy of ‘no fault’ marriage breakdown.

Read the article here.

Take away:

  • Discussions in preparation for a marriage contract need not be adversarial but can be structured to enhance the ability of the couple to communicate about financial matters, thus strengthening the relationship of the couple.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

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