A prenuptial agreement. Stock photo by Getty Images.
Though Canada has a matrimonial system, in which property division and sharing is governed by provincial law, some people still choose to get a prenuptial agreement drawn up.
In Canada, we mainly refer to prenuptial agreements as domestic contracts and they come in the form of either marriage contracts or co-habitation contracts.
Such agreements usually set out the rights and responsibilities of each party while they are together as well as if they decide to break up. These types of agreements set out matters such as ownership or division of property and support obligations.
Such contracts should be agreed on before getting married or moving in together.
Does the common law trump a prenuptial agreement?
Prenuptial agreements signal to the court that you want a different arrangement from what the common law provides. The courts will typically honour the contract if it has been drawn up properly, is as fair as possible to the parties, and the contract wasn’t signed under duress.
For instance, if you plan to marry, but you bring significantly more to the marriage than your would-be spouse, then you may want to outline in the marriage contract that you are entitled to more, upon separation and/or divorce, than your spouse.
Courts will take prenuptial agreements seriously, but it’s also not that hard to challenge them. Therefore, you need to make very sure you have a prenuptial agreement that will stand up in court, or else your spouse will be entitled to net equalization.
The same applies to co-habitation agreements. Although, the law is not exactly the same from province to province when it comes to common law spouses, your contract should set out exactly what you’re agreeing on, regardless of what the law in your province says you are each entitled to.
Be aware though that there are certain obligations the law puts upon married or common law spouses that you cannot contract out of, as noted below.
What elements do you need to have a strong prenuptial agreement?
A prenuptial agreement is a contract under the law. You need to follow the same rules and laws as is established for contracts. To make your agreement a legally binding contract, you need to make sure it complies with the elements of a contract.
In addition, both parties to the contract must reveal all of their assets and their liabilities. As well, each party should have their own lawyer representing their interests.
Writing a marriage or co-habitation agreement on your own is not wise.
Each person will need independent legal advice — that means using different lawyers, — or the agreement may end up being set aside by a court.
Having a lawyer who represents each person’s individual interests is key to making sure the agreement is fair.
You cannot contract for things like sex, remaining childless, and custody and access. There are certain obligations the law imposes that people cannot contract out of, whether they are married or in a common law relationship.
How do courts look at prenuptial agreements?
A decision from the Supreme Court of Canada in 2004 covers how courts look at prenuptial agreements in Canada. In Hartshorne v. Hartshorne, a wife sought to put aside the marriage agreement, because it was “grossly unfair.” The court allowed her appeal.
It ruled these agreements have to be fair, although as the court stated “fairness is not always synonymous with equal division.” Therefore, it’s important the agreement be fair to both parties, or the courts could set it aside.