Marriage contracts are critical

Getting married is the start of something wonderful, but you may want to create a marriage contract. That’s because in many places, there’s a default regime for property division between spouses if the marriage ends through death or divorce, and neither of you may like the results.

In Ontario, spouses can determine their own regimes for property rights, support rights, and related issues using a marriage contract, with some exceptions regarding child custody, child support, and temporary matrimonial home possession that are dealt with separately in law.

The marriage contract’s an important part of wealth protection and inheritance planning—it can help protect assets from claims by your spouse if you separate or divorce, and helps both of you pass on assets to your chosen beneficiaries upon death.

A marriage contract may be broad or narrow. It may focus more on property or on support issues and can set out different rights for both of you based on whether one of you dies or if you separate or divorce.

It can be especially helpful if you’re entering a marriage with significant assets, since the contract can state the value of certain assets will not be shared if the marriage ends. The contract can also address how changes in the prices of any these assets, or income derived from them, will be treated. And, it can set out treatment of gifts and inheritances from relatives.

Be thorough when creating a marriage contract because, under Ontario law, a court can set it aside or declare certain provisions invalid if it doesn’t meet certain tests:

• if either of you didn’t properly disclose assets or income;
• if either of you didn’t understand the consequences of the contract;
• or if the contract was entered into as a result of undue influence, mistake or fraud.

A court may also refuse to enforce provisions for spousal support in a marriage contract in certain circumstances, including where they are considered unconscionable.

If treated properly, a marriage contract can give you both peace of mind, letting you focus on more important things, like the cost of those floral arrangements for the big day.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.