While many couples on the verge of entering into a marriage have stars in their eyes, and prefer not to enter into heavy-duty discussions and negotiations about what happens if their marriage does break down, in today’s world with divorce statistics being what they are, it does make sense to enter into a marriage contract. Ask anyone who did not have a marriage contract, and subsequently had to engage a family law lawyer.
It is better to spend money on dealing with a marriage contract, while a couple are still in the romantic stage of their relationship, rather than having to deal with these issues when the bloom has long past and the war of the roses begins. Instead of dealing with this type of contract from a negative perspective it should be presented and considered as an opportunity for clients to deal with each other on the basis of being fair and equitable with each other.
Of course not every couple will want or require a marriage contract; some clients enter into a contract because they have specific assets, inheritances, business interests, properties, etc., that they want to exclude from being considered matrimonial assets, which would be subject to being shared in the event of a marriage breakdown. In some cases one or both of the parties may have previously been married and as a result may have obligations to previous spouses and/or children and as a result need to protect some or all of their assets. In other situations, whether the marriage partners are either of the same sex, or the opposite sex in today’s society they want to remain financially independent of each other.
In reviewing the Ontario Family Law Act, there is a statement which enunciates that the purpose of a specific section of the Act is to recognize that married couples have joint responsibility in dealing with financial provisions, child care and management of the household. It also provides that equal contribution is an inherent factor in marriages whether in a financial way or otherwise, as a result of the assumption of the aforementioned obligations, thereby entitling each party to an equalization of the net family assets, subject to certain exclusions.
As a result, the Act presumes there is a financial partnership between the spouses. In order to contract out of this presumption of financial partnership, and/or to modify the application of the Act to their own relationship, they can do that by entering into a marriage contract subject to certain provisions of the Act. To ensure both parties understand what they are contracting about, a complete financial disclosure by both parties is required. This disclosure includes all existing assets, and debts or other liabilities at the time of entering into the contract. The Act provides that the failure of either party to provide such information will provide grounds for setting aside the contract.
My own practice is to advise clients to provide copies of current bank statements, up-to-date statements for mutual funds and other forms of investments, current written valuations of real estate holdings, current written appraisals of jewelry, antiques, heirlooms, art, any valuable major pieces of furniture, motor vehicles, etc. I also insist on the Financial Statements of both parties being independently sworn. From a practical perspective, and to minimize legal fees, I strongly recommend to my clients that they attempt to resolve and reach a mutual understanding of all matters to be included in a marriage contract before engaging lawyers, so that the lawyers are not negotiating the contract from A-Z, with the meter running.
Furthermore, I stress to clients that this should not be an exercise in “getting the best deal to the detriment of the other party”— it should result in a fair end result for each party in the event of a marriage breakdown. If they cannot negotiate a contract which they both agree upon, they probably should not be marrying each other.
