A pre-nuptial agreement is an umbrella term for domestic contracts that are entered into prior to marriage. They may cover subjects like the financial aspects during the relationship and upon its breakdown, including ownership in or division of property, support obligations, as well as the right to direct the education and moral training of children.
If you are thinking about entering into such an agreement, you will want to do everything you can to make the contract “stick”, especially if the relationship breaks down at some point in the future. While there is no certainty that the contract will not be challenged, there are some characteristics your contract should have to promote enforceability:
- Formal Validity
Formal validity requires that the contract is in writing, signed by the parties involved and witnessed. Though independent legal advice is not a requirement to effect formal validity, it is strongly recommended to prevent challenges to the contract (discussed further below).
It should be noted that provisions within pre-nuptial contracts in Ontario related to decision-making responsibility or parenting time with children are not enforceable. Nor are provisions which limit a married spouse’s right to possession of the matrimonial home or other spousal rights under Part II of the Family Law Act.
- Complete and Honest Disclosure
Though a party’s failure to disclose a significant asset will not automatically result in the contract being set aside (Turk v Turk ONCA 2018 993), it is highly advisable that all parties to the contract give full disclosure before signing the contract.
This means disclosing significant assets or debts in existence when the contract is formed. Ensuring accurate values are given for such assets, liabilities, and income is important so that the parties can understand the consequences of the agreement they are entering into.
- Independent Legal Advice
A party can seek to set aside a contract on the grounds that they failed to understand the nature and consequences of the agreement. This can be a difficult argument for them to make if they received independent legal advice prior to signing the contract.
Independent legal advice ensures the party understands the terms of the contract and the consequences which will or can arise if they enter into it. As such, all parties to the contract should be obtaining independent legal advice prior to signing, even if no legal counsel have been involved up to that point.
Ensuring that all parties receive independent legal advice may also help to defend against challenges to the contract on the basis of fraud, duress or undue influence. It is true that a lawyer giving independent legal advice cannot determine with absolute certainty whether a client is producing fraudulent values in their disclosure. However, they may be able to detect whether that client is being subject to duress or the undue influence of another person to sign the contract. A lawyer would likely advise that the client should not sign a contract under such circumstances. Therefore, where independent legal advice is received and the party does sign the contract, a court reviewing the agreement may be more likely to believe that no such duress or undue influence existed, or, at the very least, that the parties were fully aware of such issues and agreed to the contract anyway.
Other Tips & Tricks
Make a ‘Reasonable’ Deal
A pre-nuptial contract, or any domestic contract for that matter, does not need to be fair. However, it does need to be a reasonable deal for both sides in the sense that it is not unconscionable. For example, if a party does not sign the contract voluntarily, that contract would be unconscionable and likely unenforceable.
Unconscionability is a high standard to meet, and it is not attained just by virtue of one party feeling they were severely disadvantaged by the contract terms. With that being said, it is advisable that the pre-nuptial contract be drafted in such a way that both parties obtain something of value through the deal. This is often the reason why a spouse with a high income might include a provision in their pre-nuptial agreement to pay their lower income-earning partner an amount of spousal support if they separate.
Lastly, per the court in Miglin v. Miglin 2003 SCC 24, a pre-nuptial agreement must be in accordance with the Divorce Act, both at the time of the making of the agreement and at the time of its review by the court.