A painful break-up should not be a prerequisite for a family law contract.
In my experience, cohabitation agreements and marriage contracts are some of the most underrated legal instruments in the family law arena.
If younger couples have even heard of them, they will likely dismiss the idea as either unromantic or simply unnecessary for a relationship like theirs. By the time they realize they could have used some legal protection following a split, it is too late.
Sadly, a good percentage of people eager to explore the possibility of protecting themselves and the rights of any children from previous relationships are those who have been burned before by a messy split and are determined not to make the same mistake again with a new partner.
There is a solid case to be made that older people who have had longer to accumulate a more significant collection of property and couples with blended families are the most in need of a marriage contract or a cohabitation agreement. Still, the truth is that anyone entering a new relationship — regardless of their age or unluckiness in love — can benefit from the conversations that come with drafting one with their new partner.
If you want to discuss the subject further, feel free to contact a member of our team. In the meantime, here are some basics about family law contracts.
Marriage Contracts
There is no test that people must take before getting married. But if there was, it should include a section on marriage contracts.
These agreements typically cover property brought into the union by each of the parties — which may include the family home, pensions, interest in a family business and personal possessions — and provides for their distribution in the event the relationship breaks down, allowing parties to sidestep the equalization process that typically happens during a divorce.
Without a marriage contract, Ontario law provides for an even split of property accumulated during the union. However, the matrimonial home is in a special category, with a presumption in favour of a 50-50 split regardless of its ownership status before the marriage.
Marriage contracts can also be used to set out the parties’ intentions regarding potential spousal support, although judges generally have more leeway to step in and alter the terms of agreements on this subject, which is much more susceptible to changes following unanticipated developments — especially if one party has waived their rights altogether.
Cohabitation Agreements
Romantic partners don’t have to be contemplating marriage to get their expectations around property in writing. Many consider moving in with their partner a more significant step than nuptials, and they would do well to mark the occasion by drafting a cohabitation agreement, which covers much of the same ground as a marriage contract.
Common-law spouses are often surprised to find out how limited their legal property rights are compared with married spouses when it comes to the breakdown of a relationship.
While divorces with no marriage contract in place can fall back on the process laid out in Ontario’s Family Law Act to equalize their property after separation, provincial legislation is silent on the subject of property division at the end of a common-law relationship. We tend to follow the rules of property law.
It is possible to make a special kind of equitable claim in court against your common-law ex, based on the doctrine of unjust enrichment, but this process is just as complex as it sounds like it would be — and expensive too.
Shifting demographic trends suggest that a growing proportion of Canadians should consider a cohabitation agreement to protect themselves in the event of a split, particularly if they own property.
According to a recent release from Statistics Canada, common-law couples accounted for around 23 per cent of all spousal relationships in the country, almost four times greater than the six-per-cent figure recorded in the early 1980s. This places Canada ahead of every other G7 nation, including the U.S., where just 12 per cent of couples are common-law.
Bolstering Your Agreements
If you want your family law contract to stand the test of time, you must ensure the proper process is followed during negotiations.
Anyone who later feels they gave something up without being fully informed of the consequences may challenge the enforceability of an agreement, and judges have the right to step in and set aside cohabitation agreements or marriage contracts that are unconscionable or where one party failed to act in good faith.
To demonstrate that both sides play fair during negotiations, each party must take independent legal advice before signing the agreement. In addition, providing full and frank financial disclosure to your partner is a must before putting ink to paper on the final deal.
If you are moving in with your partner or getting married and would like to explore whether a cohabitation agreement or marriage contract is right for you, schedule a consultation with me, and we can review all the critical issues together.