When a couple marries in Ontario, the
law impresses that relationship with financial obligations and
entitlements that are engaged in the event of a separation. Broadly
stated, those latent obligations and entitlements are spousal
support and sharing of property. While nobody wants to plan for or
think about a future separation, a couple may modify the spousal
support or property regimes by way of a marriage contract. For that
reason, a marriage contract can be an effective tool in a wealth
preservation strategy. While people often remark that a marriage
contract somehow compromises the romance of a marriage, couples
need to recognize that the mere action of their marriage imposes
upon them a financial contract. If such a contract is inevitable as
a result of marriage, why not ensure you have a contract that is
tailored to meet your needs?
So, what contract does the law impose? Sharing of property, or
equalization of net family property as it is called under
Ontario's Family Law Act, requires couples to share
the value of property accumulated during the marriage, with the
exception of limited exclusions such as an inheritance or a gift
from a third party. This sharing includes the increase in value of
property owned on the date of marriage. On the issue of spousal
support, the federal Divorce Act may require the spouse
with greater assets or income to pay spousal support to the other,
while at the same time promoting each spouse's
One of the most common property provisions in a marriage
contract relates to a matrimonial home. By definition, a
matrimonial home is a family residence that is ordinarily occupied
by the couple at the time of their separation. If the matrimonial
home was owned on the date of marriage, the owning spouse will
share with the other spouse not only the growth of the value of
that asset during the marriage, that spouse will share the entire
value of the matrimonial home. In other words, the owning spouse
loses the date of marriage credit for the value of the matrimonial
home. Many couples enter into a marriage contract to ensure that
this date of marriage credit is not lost.
Negotiating, preparing and concluding a marriage contract is a
complex, thoughtful and delicate process. A marriage contract must
be in writing, signed and witnessed. It cannot deal with custody of
or access to children since those issues must be determined in the
children's best interests in the context of the facts existing
at the time of separation. Parties must exchange full and frank
financial disclosure. The terms of the contract, when applied in
the context of a separation, must not generate an unconscionable
financial result, such as one spouse retaining most or all of the
family's financial resources, leaving the other spouse unable
to support himself or herself. Spouses should obtain independent
legal advice. In the absence of proper financial disclosure or
independent legal advice or in the presence of an unconscionable
result, a marriage contract may be set aside.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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It is not uncommon for parents to provide monetary gifts to their adult children. Parents may wish to help their child with a down payment on a property, or help pay out their child's existing mortgage.
On March 31, 2014, BC's new Wills, Estates and Succession Act1 ("WESA") will come into force. WESA introduces new protections for beneficiaries of estates that are in danger of being disputed or deemed ineffective by a court.
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