Domestic Contracts – Separation Agreements, Cohabitation Agreements, and Marriage Contracts (Pre-Nuptial Agreements)
A cohabitation agreement is a signed contract between two parties who intend to live together, or who already live together in a spousal relationship. The agreement sets out what will happen in the event they separate in the future.
A marriage contract, sometimes referred to as a pre-nuptial agreement, is a signed agreement between spouses who intend to get married or are already married. Just like a cohabitation agreement, a marriage contract sets out what will happen in the event the parties separate and get divorced.
Cohabitation agreements and marriage contracts are most often used to dictate whether support will be payable after separation and how the couples’ property will be divided. Both cohabitation agreements and marriage contracts are a useful tool to protect property that one or both spouses bring into the relationship. They cannot be used to dictate either parent’s right to custody or access following separation or outline how child support will be paid. Marriage contracts also cannot limit one spouse’s right to live in the matrimonial home after separation.
Separation agreements are contracts signed by spouses who have separated or are about to separate, setting out a parenting plan for the couple’s children, terms of any support payments, outlining who will live in the family home, who will be responsible for paying the family debts, and how the spouses’ property will be divided.
All three are considered domestic contracts and need to be made in writing, signed and witnessed in order to be enforceable.
Why do you need a Cohabitation Agreement or Marriage Contract?
There is no requirement for you to get a cohabitation agreement or marriage contract before starting a relationship, but it is often in your best interests to sign one. A cohabitation agreement or marriage contract can help prevent litigation and reduce legal fees in the event the relationship breaks down.
Without a cohabitation agreement or marriage contract, you leave yourself vulnerable to your spouse sharing your property, potentially having to pay support, and your spouse making claims against your estate if you pass away. For example; any property that you bring into the relationship could be subject to a claim from your spouse for division or sharing. Even if your spouse doesn’t have a strong claim to share your property, you could still be forced to spend years in expensive litigation to defend their claim. A cohabitation agreement or marriage contract reduces this risk and sets out your expectations in the event that the worst happens.
Is a Cohabitation Agreement valid after marriage?
Yes – a cohabitation agreement signed before marriage will automatically be considered a marriage contract in the event spouses get married. Most cohabitation agreements will also contain a term stating that the contract will continue to be valid and enforceable if the spouses get married in the future.
What makes a Marriage Contract, Cohabitation Agreement, or Separation Agreement void?
The Court may overturn or void an entire domestic contract or a specific clause of a domestic contract if:
- Either spouse failed to disclose significant assets or debts that existed at the time the agreement was made;
- Either spouse did not understand the nature or consequences of the domestic contract;
- Either spouse did not have the required mental capacity to sign a contract;
- Either spouse was pressured or influenced by the other spouse into signing the agreement;
- The agreement was signed by one of the parties involuntarily; or
- The terms of the agreement are grossly unfair to one of the spouses.
To increase the likelihood that your separation agreement is valid and would be upheld by the courts in the event of disagreement it is important for both spouses to be open and honest about their finances. When disclosing your assets and debts, the standard is full financial disclosure. This usually means giving your spouse a sworn Financial Statement outlining your assets and debts. It also means giving your spouse documents to validate the values outlined in your Financial Statement.
Are Marriage Contracts, Cohabitation Agreements and Separation Agreements legally binding?
Yes – unless a reason exists to void the contract as outlined above, the contract will be legally binding and capable of being enforced by the Court.
Do you need a lawyer for a Marriage Contract, Cohabitation Agreement or Separation Agreement?
While there is no mandatory requirement that you and your spouse hire a lawyer, it is in your best interests to get independent legal advice before signing any domestic contract. Independent legal advice means you and your spouse each retain a different lawyer to give you advice on the terms of the agreement. Your lawyer will review the terms of the agreement with you, ensure you fully understand the consequences of signing the contract, and give you advice on whether the agreement is in your best interest.
Having both spouses obtain independent legal advice before signing a domestic contract reduces the risk of a spouse claiming they did not understand the nature or consequences of the contract. It helps to protect your agreement and increase the likelihood it will be upheld by the Court in the event your spouse does not want to follow the agreement or tries to overturn the agreement.
It is also in your interest to have a lawyer prepare the domestic contract or assist you with preparing the domestic contract. An experienced lawyer can:
- Check that your rights are properly protected;
- Give advice on what terms to include and what terms you may want to leave out;
- Make sure nothing is left out of the agreement or point out necessary terms that you may not otherwise have thought to include;
- Help protect the agreement from being challenged or overturned in the event of a dispute;
- Discuss the practical effects of the terms of the agreement;
- Assist in negotiating the terms of the contract with your spouse; and
- Give you legal advice as the agreement is being created instead of after a tentative agreement has already been reached.
Disclaimer: The information contained on this page is only intended for information purposes and is not intended to be construed as legal advice. Speak to one of our family law lawyers if you have any questions about domestic contracts.