Want to Keep the Matrimonial Home? You NEED a Prenuptial Agreement
They say love conquers all… until it comes to divorce proceedings and the distribution of property. Then, all bets are off. Things can become especially heated when the soon-to-be exes discuss what happens to their home. Tempers can rise and you might find yourself saying things you’ll later regret. All that can be avoided, though. Drafting a prenuptial agreement can prevent arguments about who gets the house, cottage or condo later on.
What Is a Prenuptial Agreement?
A prenuptial agreement is a written agreement two members of a couple enter into before they marry. It spells out how assets will be divided in the event of a divorce.
For years, prenuptial agreements got a bad rap. Many people thought that if you signed a prenuptial agreement, you were dooming the marriage to failure before it even began.
Another misconception is that prenuptial agreements are only for the wealthy. Yes, many wealthy people enter into prenuptial agreements, but they do so because it’s a smart move. Prenuptial agreements can help you protect your property and other assets.
Property Division in Ontario
Most people in Ontario aren’t familiar with the laws surrounding property division until their marriage ends. That’s when they learn that they probably held misconceptions about who owns the family home.
In Ontario, the Family Law Act governs property division during divorce. There’s a special class of property under this law known as the matrimonial home. The matrimonial home is any property in which a person has an interest and in which both spouses lived as their family residence. A couple can have more than one matrimonial home – for example, they could own a condo in downtown Toronto and a cottage in Muskoka.
The law also says that both spouses have an equal right to the matrimonial home. That means that both parties can live there, even if one person’s name isn’t on the deed. Furthermore, you can’t sell, rent or mortgage the home unless the other spouse consents. And you have to split the value of the property equally upon its sale.
Matrimonial Homes and Prenuptial Agreements
Let’s say that you and your spouse owned a home together during the course of your marriage. You two lived there until the day you separated. Like many couples, you believed your marriage would last forever, so you didn’t think it was important or necessary to sign a prenuptial agreement.
However, it turns out that you and your spouse weren’t destined for happily ever after. Now, your marriage has come to an end. You and your soon-to-be ex are trying to figure out what to do with your home.
When you bought your home, it was worth $300,000. Thanks to skyrocketing real estate prices, it’s now worth $900,000. If the property wasn’t a matrimonial home, you would only have to split the value of the increase ($600,000 divided two ways is $300,000). Because it is a matrimonial home, you have to split the entire value of the property ($900,000 divided in two is $450,000).
How would the situation be different if you had signed a prenuptial agreement? The two of you could have decided that you would only split the value of the increase, or that one spouse would get a set amount from the sale. The only thing you can’t write in a prenuptial agreement is that one spouse gives up the right to live in the matrimonial home after separation.
Talk to a Family Law Expert about Prenuptial Agreements and Property Division
If you’re about to get married, you need an experienced lawyer specializing in family law to help you draft a prenuptial agreement. This agreement will protect your rights and assets in the event of a divorce.
To learn more about prenups in Ontario, listen to this podcast with Lorne Fine, divorce attorney in Toronto.
Fine & Associates Professional Corporation is a well-respected Toronto Law Firm that prides itself on providing quality personal service and favourable outcomes in Family Law and Divorce Law.