While some people in Ontario may cringe at the mention of a prenuptial agreement, a professionally drafted one has many advantages. Motor vehicle owners take out insurance to protect against the possibility of an accident -- not because they expect to crash. Those getting married sign marriage agreements to protect against the possibility of a subsequent divorce or of one spouse's death during the marriage.
These contracts typically specify the separate assets of each party, along with the manner in which the couple will handle appreciation in the values of those assets during the marriage. A grey area is typically the time between the filing of divorce papers with the court, and the issuing of the final divorce decree -- which can be many months or even years. Financial matters and child-related issues for that interim time could pose challenges, and a prenuptial agreement can specify how it would be handled. In some cases, those temporary measures may evolve into the ultimate spousal support and child custody orders -- or form the basis for such orders.
Specific rights of one spouse upon the death of the other -- during the marriage -- can be waived or fixed in a marriage agreement, or it can be deferred to the existing estate plan that is valid at that time. Other issues that can be addressed include the handling of professional expenses and legal fees and could prevent one party claiming refunds for such expenses after the final judgment has been entered. Marriage agreements are especially effective in handling the often complicated issues in high net worth marriages and those involving remarriages.
With the guidance and support of experienced divorce lawyers, Ontario couples can draft marriage agreements that will protect the assets of both parties during and after marriage. However, if it can be shown that there were no reasonably fair disclosure of net worth and income, or that one party was coerced into signing it, a court could declare the prenup invalid. A skilled lawyer could draft a marriage agreement in a way that will hold up in court.
Source: wealthmanagement.com, "Seven Steps to Building a Better Prenup", Jeffrey A. Weissman, Accessed on June 9, 2017