Marriage Contracts: What you need to understand

If spouses separate and divorce without a marriage contract, their property will normally be divided according to the laws of Family Law Act of Ontario. However, in advance of the marriage, or prior to separation, couples can enter a marriage contract to decide how their property will be affected without the input of a judge.

A marriage contract can deal with matters like spousal support, identify ownership over assets or change the distribution of assets after death. However, there are limits on the right to contract in family matters. These restrictions primarily arise in respect of children of the marriage and possession of the matrimonial home. Custody decisions are based on the best interests of the child, and are therefore highly contextual as circumstances change over time. A marriage contract written in the past is unlikely to meet the needs and realities of children in the present, therefore Courts will not enforce a marriage contract that address this subject. Moreover, under the Family Law Act, the matrimonial home is a special type of property that the law will not lightly allow people to contract around.

Section 52(2) of the Family Law Act allows spouses to make binding contractual agreements about the division of the marital home’s value and how it will be divided in the event of a split. However, a domestic contract cannot limit either party’s Part II rights under the Family Law Act. Part II refers to possession, designation and alienation of the matrimonial home.

To create a valid marriage contract, it must be completed in writing and can be made by either a married couple or by those who are planning to get married. A court can set aside all or part of a contract if one side failed to disclose significant assets, debts or other liabilities. Therefore, it is important to be honest and forthcoming about your financial situation. The contract can also be set aside where one side did not understand the nature or consequences of the contract, if there was any fraud, duress, or undue influence. For this reason, it is a good idea for both contracting parties to retain legal counsel.


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