A Marriage Contract is a legal document, a contract made by two people before or after they get married. It usually sets out what happens if the couple parts ways, generally financial arrangements, but can also deal with other issues that might be in contention. A Marriage Contract can apply to couples in a relationship, even if they aren’t significantly wealthy.
When should you get one? When you are the happiest together. When you are madly in love with each other you will be the most kind to your sweetheart. It probably will reflect the fairest split of assets or issues that can become ugly during a separation or divorce.
What circumstances would cause you to consider getting a Marriage Contract?
- It will open an honest dialog between the two parties to understand the other’s most important issues including finances.
- It will give the parties an opportunity to focus on the marriage, not the financial implications, particularly if one party is more affluent than the other.
- It can address debts, especially those brought into the relationship.
- By having everything in black and white, it can reduce the squabbles and resulting legal fees during the divorce. It can also shorten the settlement discussions since almost everything is laid out in advance.
- If there is a business involved, especially a family business, it can protect ownership rights.
- A Marriage Contract can be an excellent tool in the context of an estate planning exercise to protect pre-existing assets, assets inherited like the family cottage, or to fairly balance bequests to children from a previous marriage with the current spouse and/or the children in your life.
- In Ontario, it can protect a specific asset, commonly the Matrimonial Home, which is treated differently than other assets.
- These agreements usually deal with spousal support issues. It can protect the spouse who gives up a career or makes other financial sacrifices for the other.
It should be noted that there is also a document called a Cohabitation Agreement that is pretty much the same as a Marriage Contract but is designed for those couples who only want to live together and not get married.
There are a number of myths and misconceptions about Marriage Contracts and Cohabitation Agreements. Be sure you know the facts.