Marriage Contract: What you can and cannot
A prenuptial agreement, often simply called a prenup, is a savvy legal contract that couples enter into before tying the knot. Think of it as a roadmap for how to handle the financial twists and turns of a marriage, spelling out who gets what in the event of a split. Prenups can be a game-changer for anyone with significant assets, children from previous relationships, or big earning potential on the horizon. They bring a sense of financial clarity and security, ensuring that both parties are on the same page about their financial future.
But here's a question: Are all the wild clauses you hear about in movies or on the internet—like infidelity clauses or demands about personal habits—really enforceable? Dive into our article below to uncover what you can and cannot put in a prenuptial agreement in Canada, and why having a lawyer draft your prenup is essential for its enforceability.
What You Cannot Put in a Prenup?
While prenuptial agreements can cover a broad range of financial and personal matters, certain clauses are generally unenforceable due to public policy, legal principles, or because they infringe upon rights and responsibilities that cannot be waived or predetermined. Here are some common examples of unenforceable clauses and the reasons why they are not upheld in court:
1. Infidelity Clauses
Example: A clause stipulating that if one spouse commits adultery, they forfeit their right to spousal support or a share of marital property.
Reason for Unenforceability: Infidelity clauses are often deemed punitive and contrary to public policy. Courts typically do not enforce clauses that penalize personal behavior or moral conduct, as divorce laws generally focus on the equitable division of property and support rather than assigning blame.
2. Child Support and Custody Provisions
Example: A clause specifying the amount of child support or the custody arrangement in the event of a divorce.
Reason for Unenforceability: Child support and custody are determined based on the best interests of the child at the time of the divorce, not at the time the prenuptial agreement was signed. Courts have the final say in these matters to ensure the welfare of the child is protected.
3. Lifestyle Clauses
Example: Clauses dictating personal habits or lifestyle choices, such as weight maintenance, frequency of intimacy, or social media usage.
Reason for Unenforceability: Lifestyle clauses often invade personal privacy and autonomy, making them difficult to enforce. Courts generally avoid getting involved in personal aspects of marital life.
4. Waiver of Spousal Support in Unconscionable Circumstances
Example: A clause waiving spousal support regardless of the financial disparity or needs of the parties at the time of divorce.
Reason for Unenforceability: Courts may find a spousal support waiver unenforceable if it results in undue hardship or is deemed unconscionable at the time of divorce. If enforcing the waiver would leave one spouse destitute, it is likely to be set aside.
5. Provisions Encouraging Divorce
Example: A clause that financially incentivizes one party to seek a divorce, such as offering a large sum of money if a spouse files for divorce.
Reason for Unenforceability: Clauses that encourage divorce go against public policy, which aims to preserve the sanctity of marriage. Courts avoid upholding agreements that could undermine the stability of the marital relationship.
6. Illegal Activities
Example: Clauses that require or encourage illegal actions, such as hiding income to avoid taxes or stipulating illegal terms of property division.
Reason for Unenforceability: Any clause requiring illegal activity is void and unenforceable as it violates the law. Courts will not enforce agreements that contravene legal statutes or public policy.
7. Unconscionable Agreements
Example: Clauses that are grossly unfair or the entire agreement being one-sided due to a significant imbalance in bargaining power or lack of full disclosure.
Reason for Unenforceability: Courts will not enforce prenuptial agreements that are deemed unconscionable. Agreements negotiated under circumstances that exploit one party's vulnerability or lack of independent legal advice are likely to be set aside.
8. Personal Rights and Duties
Example: Clauses requiring specific personal behaviors, such as maintaining a certain appearance, performing household chores, or engaging in specific sexual activities.
Reason for Unenforceability: Such clauses infringe on personal rights and autonomy. Courts are unlikely to enforce agreements that dictate personal conduct within a marriage, as these matters are considered private and beyond the scope of enforceable contractual obligations.
9. Waiver of Retirement Benefits
Example: Clauses waiving rights to a spouse’s retirement benefits or pension plans.
Reason for Unenforceability: Certain retirement benefits, especially those governed by federal law, cannot be waived in a prenuptial agreement. Courts will not uphold clauses that attempt to waive statutory rights to retirement benefits.
10. Future Spousal Support Adjustments
Example: Clauses attempting to set future spousal support adjustments based on potential changes in circumstances.
Reason for Unenforceability: Courts prefer to assess spousal support based on actual circumstances at the time of divorce. Predicting future changes and attempting to set adjustments in advance can be deemed speculative and unfair.
These examples demonstrate the importance of drafting prenuptial agreements with enforceable terms that respect legal standards and public policy. Consulting with a knowledgeable lawyer like Omulique Legal Services is crucial to ensure the agreement is fair, reasonable, and legally binding.
Why These Clauses are Generally Unenforceable?
The primary reason certain clauses in a prenuptial agreement are unenforceable is that they violate public policy or legal standards. Courts aim to ensure that prenuptial agreements are fair, reasonable, and do not promote injustice. Let’s dive into the specifics:
Family Law Act (Ontario)
According to the Family Law Act, clauses that are unconscionable, contrary to public policy, or not in the best interests of the child are unenforceable. This law ensures that agreements do not impose undue hardship on one party or adversely affect children’s welfare. For instance, a clause waiving child support or stipulating an unfair division of assets may be struck down if it is deemed unconscionable or not in the best interests of the children involved.
Legal Reference: Family Law Act, R.S.O. 1990, c. F.3, s. 56.
Divorce Act (Canada)
The Divorce Act underscores the importance of child welfare by stipulating that any agreements regarding child support must prioritize the child’s best interests. Moreover, these agreements cannot preclude future modifications by the court. This means any clause attempting to set rigid, non-adjustable terms for child support will likely be unenforceable, as courts retain the authority to modify these arrangements to reflect the child’s evolving needs and circumstances.
Legal Reference: Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 15.1.
Public Policy Considerations
Clauses that are against public policy, such as those encouraging divorce or mandating illegal behavior, are unenforceable because they undermine societal values and legal principles. Public policy aims to maintain fairness and justice in legal agreements, and any term that disrupts this balance is unlikely to hold up in court.
What You Can Put in a Prenup?
Prenuptial agreements can include a variety of clauses that are generally enforceable, provided they are fair, reasonable, and comply with legal standards. Here is a comprehensive list of enforceable clauses:
1. Division of Property
Example: Defining how marital property will be divided in the event of a divorce.
Reason for Enforceability: Courts respect agreements that clearly outline the distribution of assets, as long as the division is fair and both parties had full disclosure and independent legal advice.
2. Separate Property
Example: Stating that certain assets owned before the marriage or received as gifts/inheritance during the marriage will remain separate property.
Reason for Enforceability: Courts uphold clauses that protect individual assets, ensuring they are not subject to division upon divorce.
3. Debt Responsibility
Example: Assigning responsibility for debts incurred before and during the marriage.
Reason for Enforceability: Courts recognize agreements that clarify which spouse is responsible for certain debts, helping to prevent future disputes.
4. Spousal Support
Example: Establishing terms for spousal support, such as amount and duration, in the event of a divorce.
Reason for Enforceability: Courts enforce spousal support agreements if they are fair and reasonable at the time of signing and do not cause undue hardship at the time of enforcement.
5. Management of Assets
Example: Defining how marital assets will be managed during the marriage, including financial decision-making and control of investments.
Reason for Enforceability: Agreements that outline the management of assets help ensure both parties have a clear understanding of financial responsibilities.
6. Inheritance Rights
Example: Specifying that certain assets will be inherited by children from previous marriages or other designated heirs.
Reason for Enforceability: Courts respect clauses that protect inheritance rights, as long as they do not violate statutory provisions or public policy.
7. Business Ownership
Example: Protecting ownership interests in a business that one spouse owned before the marriage or acquired independently during the marriage.
Reason for Enforceability: Courts uphold clauses that ensure business interests remain with the original owner, provided there is full disclosure and fairness.
8. Education and Career Plans
Example: Agreements on supporting each other’s education or career advancement, including financial and emotional support.
Reason for Enforceability: Courts enforce clauses that reflect mutual support for personal development, as long as they are specific and reasonable.
9. Financial Contributions
Example: Defining each spouse’s financial contributions to household expenses, savings, and investments during the marriage.
Reason for Enforceability: Clear agreements on financial contributions help prevent disputes and ensure both parties are aware of their responsibilities.
10. Disposition of Marital Home
Example: Determining what happens to the marital home in the event of a divorce, such as selling the property or allowing one spouse to buy out the other’s interest.
Reason for Enforceability: Courts respect agreements that provide clear instructions on handling the marital home, ensuring an orderly resolution.
11. Retirement Benefits
Example: Defining how retirement benefits and pension plans will be divided upon divorce.
Reason for Enforceability: Courts uphold agreements that clearly outline the division of retirement benefits, ensuring fairness and compliance with legal standards.
12. Savings and Investments
Example: Establishing how savings and investment accounts will be managed and divided.
Reason for Enforceability: Agreements that outline the handling of savings and investments help ensure both parties are aware of their financial responsibilities and future plans.
13. Alimony Waivers
Example: Waiving the right to alimony, provided it does not result in undue hardship.
Reason for Enforceability: Courts may enforce alimony waivers if they are fair and do not leave one party in a financially precarious situation.
14. Dispute Resolution
Example: Requiring mediation or arbitration in the event of a marital dispute or divorce.
Reason for Enforceability: Courts support alternative dispute resolution methods that aim to resolve conflicts amicably and efficiently.
15. Insurance Policies
Example: Requiring one or both spouses to maintain life insurance policies with the other as the beneficiary.
Reason for Enforceability: Courts enforce agreements that provide financial security and ensure that both parties are protected.
These examples illustrate the types of clauses that are typically enforceable in prenuptial agreements, provided they are fair, reasonable, and comply with legal standards. Consulting with a knowledgeable lawyer is crucial to ensure the agreement is properly drafted and legally binding.
Still Think You Don’t Need a Lawyer to Draft a Prenup?
Engaging a lawyer to draft your prenuptial agreement is essential to ensure that the document is legally sound, comprehensive, and enforceable. A lawyer brings expertise in family law and a deep understanding of the legal standards and public policies that govern prenuptial agreements. They can help identify and address potential issues, ensuring that all terms are fair and reasonable for both parties. Additionally, a lawyer can provide invaluable guidance on financial disclosures, protecting both spouses from future claims of fraud or coercion. By having a lawyer draft your prenuptial agreement, you not only safeguard your individual interests but also enhance the likelihood that the agreement will be upheld in court, providing clarity and security for your financial future.
On the other hand, drafting a prenuptial agreement yourself or using a template from the internet carries significant risks. These agreements may lack the specificity and legal rigor required to be enforceable. Without proper legal guidance, you might overlook critical legal requirements or include unenforceable clauses that could render the entire agreement invalid. Templates often fail to account for unique personal circumstances and the nuances of state or provincial laws, leading to potential disputes and financial losses. Furthermore, do-it-yourself agreements are more vulnerable to challenges in court, particularly if one party claims they were unfairly disadvantaged or did not fully understand the terms. To avoid these pitfalls and ensure your prenuptial agreement stands up to legal scrutiny, it's crucial to consult with a knowledgeable lawyer who can tailor the document to your specific needs and protect your interests.
Controversial Canadian Cases
Case 1: Spousal Support Waiver
Miglin v. Miglin, 2003, Ontario
In the case of Miglin v. Miglin, the Supreme Court of Canada examined the enforceability of a spousal support waiver included in a prenuptial agreement. The Migs, a wealthy couple, married after a brief courtship. Prior to their marriage, they signed a prenuptial agreement that included a clause waiving spousal support. At the time of their divorce, Mrs. Miglin sought spousal support despite the agreement. She argued that the circumstances had changed significantly since the agreement was signed, making the waiver unfair. The Court established a two-step test to determine the enforceability of such waivers. First, the Court considered whether the agreement was fair and reasonable at the time it was made. It was found that the agreement was entered into voluntarily, with full financial disclosure, and both parties had independent legal advice. Second, the Court assessed whether the circumstances at the time of enforcement rendered the agreement unfair or unconscionable. They found that the agreement remained fair, given the original intent and circumstances of the couple. Thus, the spousal support waiver was upheld.
Case 2: Division of Property
Hartshorne v. Hartshorne, 2004, British Columbia
The Hartshorne case involved a prenuptial agreement that heavily favored the husband, a successful businessman. Before their marriage, Mr. Hartshorne insisted on a prenuptial agreement to protect his substantial pre-marital assets. Mrs. Hartshorne, a school teacher, signed the agreement after some hesitation and obtaining independent legal advice. Upon their divorce, Mrs. Hartshorne challenged the agreement, claiming it was unfair as it left her with a fraction of the marital assets. The Supreme Court of Canada ruled that the prenuptial agreement was enforceable. The Court emphasized that both parties had entered into the agreement voluntarily, with full knowledge of its terms and consequences. The agreement was not found to be unconscionable, and respecting the autonomy of the parties was paramount. This case highlighted the courts' reluctance to interfere with agreements that were fairly negotiated and mutually agreed upon.
Case 3: Unconscionable Agreement
Rick v. Brandsema, 2009, British Columbia
The Rick v. Brandsema case involved a prenuptial agreement that was set aside by the Supreme Court of Canada due to unconscionability. The couple had been married for 27 years and had built a successful dairy farm together. During the divorce proceedings, it became evident that Mr. Brandsema had taken advantage of Mrs. Rick's vulnerable emotional state and lack of independent legal advice when negotiating the prenuptial agreement. Mrs. Rick suffered from severe mental health issues and was under significant stress. Mr. Brandsema, who was more financially savvy, failed to fully disclose his assets and pressured Mrs. Rick into signing an agreement that grossly favored him. The Supreme Court ruled that the agreement was unconscionable, as it was negotiated under circumstances that exploited the wife's vulnerability. The Court emphasized the necessity for fair negotiation and full disclosure in prenuptial agreements to ensure that neither party is unduly disadvantaged.
Case 4: Child Support and Custody
L.M.P. v. L.S., 2011, Quebec
In L.M.P. v. L.S., the Supreme Court of Canada addressed the enforceability of a prenuptial agreement that attempted to set terms for child support and custody. The couple had included provisions in their prenuptial agreement that specified the custody arrangements and child support payments in the event of a divorce. However, when they separated, the court had to determine what was in the best interests of the child at that time. The Supreme Court ruled that any provisions regarding child support and custody in a prenuptial agreement are not binding on the court. The Court emphasized that decisions regarding child support and custody must be made based on the best interests of the child, which can only be determined at the time of the divorce. This ruling underscored that parents cannot pre-emptively decide these matters, as the child's welfare is paramount and may require different arrangements than those initially agreed upon.
Case 5: Unenforceable Financial Penalty
LeVan v. LeVan, 2008, Ontario
The LeVan case involved a prenuptial agreement with a clause that imposed a significant financial penalty for infidelity. Mr. LeVan, a wealthy businessman, and Mrs. LeVan, who had a modest financial background, agreed to a prenuptial agreement that included a clause requiring Mr. LeVan to pay Mrs. LeVan a large sum of money if he was unfaithful. Upon discovering Mr. LeVan's infidelity, Mrs. LeVan sought to enforce the clause. The Ontario Court of Appeal struck down the clause, ruling it unenforceable as it was contrary to public policy. The court found that imposing a financial penalty for personal misconduct, such as infidelity, was punitive and did not align with the principles of matrimonial law. This case highlighted the courts' position that prenuptial agreements should not include punitive measures for personal behavior.
Conclusion
Prenuptial agreements are powerful tools for protecting your financial interests and ensuring clarity in the event of a divorce. However, it's crucial to understand what you can and cannot include in these agreements. Enforceable clauses generally relate to the division of property, debt responsibility, spousal support, and estate planning. In contrast, lifestyle clauses, child custody and support arrangements, infidelity penalties, and illegal provisions are typically unenforceable. By working with a knowledgeable lawyer, you can craft a prenuptial agreement that is fair, legally sound, and tailored to your specific needs.
