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

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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.

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Trending: Ins and Outs of a Pre-Nup

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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.

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The Second Marriage: Will a Marriage Contract Give Financial Protection?

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People who marry later in life and have accumulated assets (or debts) or are entering second marriages and have experienced the process of an acrimonious division of assets, are among those who may benefit most from a marriage contract. The question often posed is, ‘Will this contract actually protect my assets or income?’

This article discusses the Supreme Court of Canada decision in Hartshorne v. Hartshorne (2004). In that case, the wife (a lawyer) entered the marriage with no assets but with debt. The couple had one child before marriage and another after. The wife stayed home to care for the children. The marriage contract, signed on their wedding day, provided that the husband’s assets would not be shared with the wife ($1.6 million at the time of marriage), but that she would receive a share in the matrimonial home, and spousal support. She received independent legal advice that the agreement was one sided, but signed anyway. Upon separation, she was entitled to property worth $280,000 (plus support) and he was entitled to property worth $1.2 million. The SCC upheld the contract. Both parties were lawyers; both had independent advice; the wife knew the consequences of disrupting a career to care for children and had made that decision before the marriage; and the husband (a lawyer) was in a position to provide support according to the terms of the agreement.

It is important to note that although the agreement favoured the husband, it was not completely one sided: the wife did receive support and some marital assets. The net property difference between the statutory regime and the marriage contract was around $400,000.

The message from the Supreme Court of Canada appears to be: if the agreement is otherwise valid and there is no undue pressure or unconscionability, and the result is what the parties envisioned when they signed the contract, “a deal is a deal”.

Read the article here.

 

Take away:

  • As long as there is no undue pressure or unconscionability, courts may be willing to uphold a valid marriage contract, even if it is one-sided.

 

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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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