Niagara Mediation can support you through the negotiation and/or drafting of a variety of legal agreements.
Please contact Niagara Mediation to learn more about the following contracts that may meet you needs.
What is a Prenup?
A prenuptial agreement (more commonly “prenup”) is a written contract created by two people before they are married. A prenup typically lists all of the property each person owns (as well as any debts) and specifies what each person’s property rights will be after the marriage.
Who Needs a Prenup?
Prenups are not just for the rich. While prenups are often used to protect the assets of a wealthy fiancé, couples of more modest means are increasingly turning to them for their own purposes. Here are some reasons that some people want a prenup:
- Pass property to children from prior relationships.
A marrying couple with children from prior marriages may use a prenup to outline what will happen to their property when they die, so that they can pass on separate property to their children and still provide for each other.
Without a prenup, a surviving spouse might have the right to claim a large portion of the other spouse’s property, leaving much less for the kids.
- Clarify financial rights.
Couples with or without children, wealthy or not, may simply want to clarify their financial rights and responsibilities during marriage.
- Avoid arguments in case of divorce.
As we know, many marriages end in divorce or unhappy partnerships. A prenup will allow for an easier and cost efficient transition away from a failed relationship.
Prenups can also be used to protect spouses from each other’s debts, and they may address a multitude of other issues as well.
If you are planning a wedding, it would be wise to speak to an experienced professional to understand your options and protect both parties in the event of a separation.
What Is a Postnuptial Agreement?
A postnuptial agreement is a contract created by spouses after entering into a marriage that outlines the ownership of financial assets and other issues in the event of a separation or divorce. The contract can also set out the responsibilities surrounding any children or other obligations for the duration of the marriage.
Understanding Postnuptial Agreements
As with prenups, postnuptial agreements allow a couple to minimize disagreements caused by financial pressures or other areas that induce tension. Executing a postnup will allow spouses to establish an equitable distribution of assets if the marriage dissolves.
Marital agreements, including postnuptial ones, are often considered taboo or not in the spirit of love or companionship; however, the contract will remedy financial discomfort and the couple could choose to enter into an agreement in hopes of maintaining marital harmony.
There are five basic elements to a postnuptial agreement:
- It must be in writing. Oral contracts are not enforceable
- It must be entered into voluntarily by both parties
- It requires full and fair disclosure of relevant information at the time of execution
- Terms must not be unconscionable or unjust or one-sided in nature
- Both parties must sign the agreement
Reasons for Postnuptial Agreements
There are countless reasons why couples may look toward a postnuptial agreement to support their well-being. Perhaps they simply didn’t get around to drafting a prenup before their marriage.
The following are other common scenarios in which couples may seek a postnup.
Protecting an Inheritance
If one of the spouses expects a large inheritance, the couple may want to work out who’s entitled to the money should they split. Although inheritances received by one spouse during the marriage are usually not considered community property, if an inheritance has been handled in a way that caused it to become co-mingled with community property, the other spouse may be entitled to some or all of it. With a postnup the agreement would override that equal claim on property and ensure that the heir continued to own their inheritance.
Provide for Stay-at-Home Parents
A stay-at-home parent likely has earned less than the other spouse and may turn to a postnup to ensure their well-being in the event of a separation.
Ownership or shares in a private business
TFSA’s bank accounts, and RRSP’s are easy to value in a divorce proceeding, but putting a dollar figure on a business in which one or both spouses are invested is considerably harder. Because valuing a company can be extremely expensive and time-consuming, some couples use postnups as a way to categorize the business as separate property that will stay with the titled spouse. The couple may agree to give the other spouse a bigger share of non-business assets to make up for it.
In cases where one spouse’s parents gave the couple a substantial amount of money—perhaps for the down payment on a house—a divorce settlement can be a particularly awkward process. A postnuptial agreement provides the in-laws (and their child) with the peace of mind that they’ll be reimbursed if the relationship doesn’t last. The contract may stipulate, for example, that the spouse whose family was the source of the money gets the first $100,000 in assets to recoup the funds.
Rebuilding a Relationship
In some cases, negotiating these topics is seen as a way to keep a struggling marriage solvent. Suppose, for example, that one of the individuals has been unfaithful. Agreeing on post-divorce terms that are favorable to the other spouse can be a sign of an intention to keep the relationship intact.
Parenting Agreements (sometimes called Custody Agreements) outline the parenting time and decision-making responsibility for those that were never married, or have chosen to separate and not yet pursued a divorce. In Ontario, the following arrangements are available to parents:
Sole custody allows one parent to permanently live with their child. If you enjoy sole custody, you have the right to determine all significant decisions in your child’s life regardless of whether the other parent agrees or not. The other parent can access the child at your discretion, or if the court grants the access order.
Joint child custody means that you and your partner have equal rights to the child. Both must work together for the child’s benefit, sharing responsibilities of making significant decisions and raising the children.
Note that joint custody doesn’t mean that the children must reside on both parents’ premises equally. The arrangements vary depending on what’s best for the child. You can have your home as the primary residence, while the other parent’s home serves as a secondary residence where the child can visit on holidays and weekends.
If you decide on shared custody, you have equal rights to the child as the other parent. It’s almost the same as joint custody, in that you share responsibilities of raising and making decisions for the child. However, this kind of custody is common when one parent spends most of their time far from home, one parent is injured or ill, unable to take care of the child and one parent is more monetarily stable than the other.
Split custody gets granted when you have more than one child. One child may stay with you, while the other stays with the other parent. That means that each child permanently lives with their respective parent. However, you can have a rotating schedule to ensure each child spends time with the other parent.
Therefore, if you have split custodianship, you may have shared legal custody of the two children but physical child custody of only one. This kind of custody can be complicated and frustrating to the children.
Common Law Partner Agreement / Cohabitation Agreements
What is a Cohabitation Agreement?
A cohabitation agreement is a contract that is usually made between partners in a common law relationship. The agreement helps the parties protect their individual interests and property during the marriage, and determines their rights and responsibilities, should the relationship end.
Although it sounds cold-hearted for a couple to try to keep their property from their partner after separation, you should know this is not the case. Usually, there are several complicated laws that apply to a person’s property after they formally marry someone else or start a common law relationship.
Based on the application of these laws, the property that a person acquires during the relationship, and even their debts, may be regarded as shared property. This means that, contrary to your intentions, you may be responsible for the debts of your partner, even though you had little to no input in how it was amassed.
A cohabitation agreement allows the partners freedom to decide on these matters. If the parties wish to share every aspect of their finances, assets and debts, then they can exercise their rights by signing a cohabitation agreement to that effect. And if they want to be have more freedom over their own property and debts, then they can also do that through a cohabitation agreement.
Most couples use cohabitation agreements to determine how their property will be treated in the event of separation. Some others also use these agreements to decide important matters that come up during the relationship, such as who will be responsible for expenses, how their income will be treated etc.