The main purpose of a marriage contract is to allow people getting married, or people already married, to make their own rules as to almost all of their rights and obligations on marriage breakdown. The marriage contract can also establish rights and obligations during the marriage, but is rarely used to do so.

Most people should not have marriage contracts because their rights and obligations on marriage breakdown as set out in the Divorce Act and the Family Law Act are fair for most cases. Younger people getting married for the first time, who do not have substantial assets do not need a marriage contract.

There are some situations where I believe a marriage contract is warranted. One case occurs when one person is bringing into the marriage a home the couple will live in. Without a marriage contract, the owner of the house will get no credit on marriage breakdown for having that house if the couple are still living in it at separation. Another situation occurs when both persons getting married have been married before. In this case, a marriage contract would be needed if the couple wanted to ensure that the children from the first marriage are the primary beneficiaries of their parents’ estates. Another situation occurs when one person, at the time of marriage, has substantially more assets and wants to ensure that he or she, especially in a short marriage, retains those assets and their increase in value. A marriage contract is also useful if for whatever reasons the couple wants to make their own rules for marriage breakdown rather than let the Family Law Reform Act dictate their rights.

The marriage contract is only one element in an overall plan to protect one’s assets during and after the marriage. Other elements are the will, powers of attorney, legal advice and a financial management plan. The legal advice would consist of the following:

(a) information and advice as to the present law so as to establish whether a marriage contract is really necessary;
(b) advice about the contents of the marriage contract;
(c) advice on the will and powers of attorney; and
(d) advice on management of one’s financial affairs based on the marriage contract.

The financial management plan is important. It would defeat the purpose of the marriage contract that stated both parties retained their own assets if one spouse then put all his or her income in savings and the other spouse spent his or her income on ongoing expenses.

There are two subjects that cannot be dealt with in a marriage contract. The issue of custody of children is not allowed. The Court will decide that issue on marriage breakdown on the basis of the best interests of the children and not what the parents may have contracted to. Also, one cannot bargain away possible rights to exclusive possession of the matrimonial home. Though support can be dealt with in a marriage contract, the Family Law Act allows a Court to disregard the support provisions if it finds them to be unconscionable.

A marriage contract need not deal with all the issues that arise on marriage breakdown. Often the marriage contract will simply state that the spouse bringing the matrimonial home into the marriage gets credit for its value. It is not uncommon to have the marriage contract come to an end if the parties have not separated by the time the marriage reaches its fifth anniversary.

A major advantage of the marriage contract is that it provides a much greater degree of certainty as to the exact rights and obligations on marriage breakdown than the Family Law Act or Divorce Act. This results in a lower psychological impact as well as lower legal fees. If the contract was fair under the circumstances, and entered into with no misrepresentation, full financial disclosure, independent legal advice and no undue pressure, the marriage contract should be a valid agreement that will dictate the rights and obligations of the couple if the marriage breaks down and separation or divorce occur.

Marriage contracts are presently not that common because before 1978 they were actually unlawful in Ontario. In 1978 the Family Law Reform Act allowed marriage contracts but until the major changes in family law with the Family Law Act in 1986 they were not as useful. Now, though they are not necessary for most marriages, they are important in many different situations.

*This article can only provide a general overview of a legal topic. Readers should consult a lawyer and not simply act on the information provided in this article.

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