Podcast: Prenuptial Agreements and Marriage Contracts in Ontario
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In this transcribed interview with Dale Goldhawk of Zoomer Radio (AM740) in Toronto, family and divorce lawyer Lorne Fine (of Fine & Associates Professional Corporation) offers advice on prenuptial agreements and marriage contracts. When dealing with matters like this, a Toronto divorce lawyer may just be what you need. After all, taking on family law matters on your own is not a pleasant matter. Read the interview below, or listen to the podcast at the bottom of the page.
Goldhawk Fights Back Podcast: Recorded Feb 21, 2013
Dale: Okay, enough of this talk about privacy. Let’s talk about your
marriage. Nothing private about that. Lorne Fine is here. He’s
our divorce lawyer. He’s in today. Lorne, very nice to see you
once again.
Lorne: Thank you for having me.
Dale: I want you to start off by telling us what the difference is
between a marriage contract, we hear about them all the time,
and a prenuptial agreement?
Lorne: Okay. So, a prenuptial agreement occurs, but they’re both
called “domestic contracts.” A prenuptial agreement occurs prior
to marriage. So, what that contract does is it’s a road map. So,
it describes Announcer: What’s going to happen during the
marriage as far as finances are concerned. And it also deals
with what’s going to happen when there’s a breakdown of
marriage.
A marriage contract happens during the marriage. And it says what’s
going to happen when we break up. So, a marriage contract can
turn into a separation agreement. Those are the essential
differences.
Dale: So, a marriage contract is a contract after the contract was
signed, essentially. Because you sign the contract, in effect,
when you get married.
Lorne: You’re already married.
Dale: One or both parties says “Well, let’s renegotiate the contract”
in a way, right?
Lorne: Well, you and I were talking about the McCain case. So, they
were married for, I think, 10 years into the marriage. And the
old man McCain said “You have to enter in the marriage contract
what happens in the event that you separate. I don’t want you to
have part of my business anymore.” So, the wife entered into a
marriage contract, 10 years into the marriage.
The marriage lasted another 10, 20 years. And then she said “Wait a
second. That’s not fair. I’ve been in this marriage for so long
and that contract is not fair” and the court said that was
correct. It wasn’t a fair marriage. It’s under appeal, that
decision is under appeal, so, we’ll see what happens. But you’re
right. It’s a contract after the contract.
And like any contract, it’s still subject to attack. You can still attack a marriage contract.
Dale: You can attack any contract, can’t you?
Lorne: You can attack any contract, that’s right.
Dale: You can contest pretty well anything in court. Whether or not
you win is yet again, another [inaudible at 00:02:28]
Lorne: That’s right. But like you said, it’s a contract that can be
attacked. So, it can be attacked for various reasons. If there’s
duress, if there’s unconscionability, if there’s
misrepresentation. If there’s…you can’t deal with custody and
access. So, when you have a marriage contract or a prenuptial
agreement, you can’t say who’s going to have custody.
Dale: That’s out of it, that’s not part of it, right?
Lorne: It’s not binding on the court. The court will always look at
the best interest of the kids. You can’t say what’s going to
happen for child support.
Dale: So, a contract, a marriage contract, could spell it out. But
the court would say “Hey, listen, we’ll decide.” The court will
decide.
Lorne: The court’s going to say “We’re going to see what’s in the best
interest of the kids.” So, like you said, it’s in the other
contract. It can be tact. The form of it should be in writing.
It should be signed. It should be witnessed. And the best thing
is to get independent legal advice. The best thing is to get a
lawyer to help both sides. Because it will alleviate the ability
for one side to attack. It would be more difficult to attack a
marriage contract if there was ILA, independent legal advice.
Dale: Okay. Well, that’s always a good thing, isn’t it? You would
advise that.
Lorne: Always a good thing.
Dale: Is it only rich people who go for marriage contracts? Or can
mere mortals of modest means also decide that they would need a
prenuptial agreement, for example?
Lorne: Mere mortals should also have a prenuptial agreement.
Dale: Why?
Lorne: Well, a lot of people that come to me come to me because
they’re bringing a matrimonial home into the relationship. And I
think I spoke about this before. But a matrimonial home is
treated differently than other property. When you separate, for
instance, if you have a RSP and you separate. And the RSP was
worth $2,000 on the date of separation and $1,000 on the date of
marriage.
The increase of value from the date of marriage to the date of
separation was $1,000. So, you’re dividing $1,000. Let’s say you
have a matrimonial home. You bring it into the marriage. And you
have, the value on the date of marriage was $400,000. And when
you separate, it’s $600,000. So, it’s increased by $200,000.
You don’t share $200,000. You share the $600,000. You don’t get a
date of marriage deduction for a house. So, it’s treated
differently. People usually will say to me “I’m bringing in a
house, I want to protect my house. And I want to an agreement to
say that in the event that we separate, this house is separate
and distinct and it’s mine. And it doesn’t form part of the
property.”
It also happens when people bring in businesses. Maybe they have a
business that they don’t want to share. It’s the same type of
thing.
Dale: “Honey, I’ve got this business, but I don’t want to share it
with you, but I love you anyway.” It’s kind of like that, isn’t
it?
Lorne: It’s exactly that. It’s like that all the time. “I love you
very much, but just in case…”
Dale: “But just in case I won’t love you next Tuesday. Or you won’t
love me on Wednesday.”
Lorne: Exactly. It’s tough because you’re going into a marriage.
You’re hoping for the best, but you’re planning for the worst.
And it’s best if you do the contract together collaboratively in
a nice manner. Not aggressively.
Dale: Not in an adversarial way on the contract. That’s for later
when you’re getting divorced. There will be plenty of time for
that later, right?
Lorne: Hopefully not.
Dale: Are there any figures to show that those who have marriage
contracts or prenuptial agreements, that those marriages often
don’t last? Is that a predictor?
Lorne: That’s interesting. I don’t know. That’s an interesting
thought. Just because someone has a marriage contract doesn’t
mean that their marriage is not going to last. I think it means
the person is practical and reasonable. There’s nothing
unreasonable about it. Love is very wonderful, but you have to
be practical, too.
Dale: And this is a divorce lawyer speaking, love is very wonderful.
When you can find it and when it lasts, right?
Lorne: Yes, but you have to be practical.
Dale: Do you think the trend then, the trend seems to be there right
now, that more and more people are getting involved in marriage
contracts and prenuptial agreements?
Lorne: Well, I think people are more aware of it. And people are doing
it more often. You just have to be very careful when you do it.
You have to realize that it can be attacked by the courts. It’s
important to have disclosure, financial disclosure. There’s lots
of instances where people enter into a marriage contract and
conceal assets.
“I love you honey and I’m bringing in $100,000. Really, I’m bringing
in $500,000, I’m not telling you about the rest of the assets
that I have. I’m hiding my other assets just in case. I don’t
want you to know about them.” Those are the types of contracts
that get set aside. Because the agreement has to be made on full
disclosure so that, in particular, especially a prenuptial
agreement. Because you’re contracting rights away, right? One
spouse is contracting rights away. So, it’s important to know
what the deal is.
Dale: I would think that hiding assets or for that matter, hiding
debt, that those are large issues when it comes to marriage
difficulties.
Lorne: Financial issues are huge issues, yes. So, the disclosure means
everything. People think that they’re going to be better off if
they hide their financial disclosure, if they hide their
financial situation. You won’t be.
Dale: If you’re “hiding” something from your spouse, I would suggest
that you’re off on the wrong foot to begin with, right?
Lorne: Well, people do it all the time, unfortunately. People do it
all the time. You’re supposed to give your spouse full and frank
disclosure, right? You’re supposed to be open with your spouse.
Dale: Well, if anybody gets full and frank disclosure, it should be
your spouse, you would think.
Lorne: You would think.
Dale: Yeah. If somebody came to you and say “You know, Lorne, we
can’t decide whether or not we should have a prenuptial
agreement,” I haven’t married yet. What would you say to try and
help them make up their mind one way or the other?
Lorne: Well, especially if it’s a second marriage and there’s kids
involved from the first marriage. It’s certainly a reasonable,
practical thing to do. And like I said, it just has to be done
properly. Independent, legal advice. Full disclosure. I have a
client who just won’t give full disclosure. Says “I don’t want
to do it. I won’t do the agreement. If there’s not a full
disclosure, I won’t do the agreement.” So, I think it’s a smart,
practical thing to do.
Dale: All right. If you have a comment or a question, a question
about getting divorced, getting separated or getting back
together, divorce lawyers play a role there, too, in getting
back together. I know you’re not a marriage counselor, per se,
but does it happen? That you go to war and suddenly, a peace
breaks out.
Lorne: It’s happened to me in the past. Where we’ve had a four-way
settlement meeting and the parties were going at each other. And
then, we opened the door and there they were hugging each other
and they reconciled. So, sometimes, that happens. Sometimes that
happens.
Dale: Did that give you a nice, warm feeling deep down in your heart?
Lorne: Sure. That played a role. Before you sign a divorce
application, you’re actually supposed to say to the party that
signed the divorce application “Have you considered marriage
counseling? Are you sure you want to do this”? And “Maybe you
should get back together.” So, a lawyer is supposed to say that
to a party.
Dale: Well, that only makes good sense. It only sounds to me like
fair treatment of the situation, right?
Lorne: Right. Most people look at me like I’m crazy when I ask them
that.
Dale: Do they ask “Aren’t you the divorce lawyer”?
Lorne: Why do you think I’m here, why are you asking me these
questions, right? But a lawyer has to sign and saying that
you’ve recommended that you go for marriage counseling.
Dale: This is the lawyer saying “Are you sure”? Of the same way a
lawyer might say “Are you sure you want to sue Joe Blow? Let’s
be absolutely sure that this is what you want. Are you committed
to it”? I think you’re not doing anything more than that, are
you, really?
Lorne: Well, that’s a commercial. That’s a commercial aspect.
Dale: I guess. But so is a divorce in many, many ways, right?
Lorne: You’re right. It is a business transaction.
Dale: With an emotional rider attached to the side.
Lorne: Exactly.
Dale: Loren J. Fine is here. He is our divorce lawyer. And he’s
available for your questions about divorce. We’ve been talking a
little earlier about marriage contracts and prenuptial
agreements. Here are the numbers if you have a question. 416-360-
0740 or 866-740-4740. And we have Doug on the line from Toronto.
Doug, do you have a question.
Doug: Yeah. My question, Dale, is how does this stuff get enforced?
Let’s say, hypothetically, my son was, all of a sudden,
confronted with a wife that took the kids and left for high
ground. And trying to gather her in and get an agreement is one
thing. But we’re sure that once the agreement is replaced, she’s
going to abandon it and just carry on her merry way.
Dale: You’re talking about a separation agreement then, I guess?
Doug: Well, that’s a nice way of saying it.
Dale: Yeah. What are your thoughts on that, Lorne?
Doug: Enforcement, you know?
Lorne: You want to enforce an agreement that can be changed into a
court order and enforce it through the courts. But it sounds to
me like your son is separating now?
Doug: My son.
Lorne: Your son has separated?
Doug: He came home and she had taken all–
Dale: Whoops. Are you there, Doug? Doug. We lost him.
Lorne: I think he said he came home and she was gone.
Dale: She was gone.
Lorne: Hello?
Doug: Hello.
Lorne: Hi. Did you say he came home and his wife was gone with the
kids?
Doug: That’s right.
Dale: Okay.
Lorne: So, in that situation, I don’t think an agreement is the way to
go. Because it sounds urgent.
Doug: Well, we’re going to go to court. But once the court agreement
is in place, how do you enforce it? Short of hiring a big guy
800 pounds.
Lorne: Okay, well you get a court order. And the court order is going
to say that she is to return the kids to his care or return the
kids to the house. And if she breaches the order, then that’s a
contempt order. Courts make an order expecting people to comply
with the orders. So, that’s why we have courts and that’s why
there’s court orders.
If people disobey court orders, there’s anarchy, right? So, the best
thing you can do is go to court and get a court order for her to
return the kids.
Dale: Ultimately, the court orders have to be obeyed. There’s no
debate about that at all, is there?
Lorne: No, judges do not like when their words are not obeyed.
Dale: No kidding. Doug, thanks very much and good luck in helping
your son. Here’s Victoria calling from Etobicoke. Victoria, do
you have a question?
Victoria: Yes, I do. My brother purchased a home 25 years ago on his own
in his own name and he paid it cash. Then, he decided to get
married. Was married for 10 years, divorced. His name was still
on the house. My question is, why was she entitled to 50 percent
of it?
Dale: All right, Lorne?
Lorne: Okay. As I said initially, a matrimonial home is treated as
different property. They were married for 10 years, they were
married for a fair amount of time. And it’s unfortunate. But if
your brother wanted to protect that asset, he should have had a
prenuptial agreement.
Victoria: Even if the home was, the title was only in his name and his
name only?
Lorne: It doesn’t matter.
Dale: Matrimonial home 50 percent, isn’t that the rule? Close to
that?
Lorne: Close to that, not necessarily 50 percent. But you can’t get an
exclusion for what you owned on the date of marriage. You have
to look at all the assets and liabilities of the person. But you
can’t say “Oh, I owned it before the marriage and now I should
it own it afterwards and you don’t have a share.” If that’s what
he wanted, then he should have had a marriage contract.
Dale: That’s the only asset that’s treated like that, right?
Lorne: That’s the only asset that’s treated differently with the
matrimonial contract.
Dale: Go ahead, Victoria.
Victoria: If he would have had a marriage contract. And even 10 years,
the house was worth extremely more, he would have protected
himself, even if the home was worth more?
Lorne: That’s right.
Dale: However, that’s water under the bridge now, isn’t it?
Victoria: It is. It’s over and done with, thank God.
Lorne: There’s nothing that you can really do now.
Victoria: Well, thank you so much for your time. Great topic, today.
Lorne: My pleasure.
Dale: Thanks, Victoria.
Victoria: Take care, bye-bye.
Dale: I know it’s complicated, there’s always a danger in always
oversimplifying some of these complex laws. If you bring a house
to the marriage and the house is in your name. The day that
you’re married, your spouse has a growing claim on that house,
right?
Lorne: That’s right.
Dale: That’s how it works. And if you’re married a week, the claim
would not be as great as if you were married the 10 years in the
aforementioned example.
Lorne: Well, if the last individual was married for a week, he would
be okay. He would tell the spouse “You’re out of luck. You don’t
have an interest in my house because we’re only married for a
week” right? Or a month or a few months. But 10 years is a fair
amount of time.
Dale: Okay. And the expectation is that could be roughly 50 percent.
The spouse who was house-less after a time would be entitled to
50 percent of the house.
Lorne: I don’t know if it’s 50 percent or what it is, because you have
to look at all the assets, all the assets and liabilities. But
you don’t get to exclude the date of marriage value of the
house. So, you’re really out of luck when it comes to this
particular asset. Unless you have a marriage contract.
And this example, is the perfect example of why you need a marriage
contract.
Dale: Yeah, all right. Here is Emma on the line from West Hill. Emma,
do you have a question?
Emma: Yes, I do. What is this about a prenup before marriage? The
person was married before, I was married before. I have property
that I want to give to my nephews. He has property and a house.
Can I tell him he can give his property to whoever he wants to
and giving my land to my nephews?
Lorne: Can you do that? Of course. The best thing you could do, are
you married yet or you’re not married yet?
Emma: Not yet.
Lorne: Okay. So, you say to your fiance.
Emma: Intended.
Lorne: Okay, you say to your fiance, “This is our second relationship.
And I have property, you have property, you have a house. I have
family, you have family. Let’s enter into an agreement. Let’s go
to a lawyer. I’ll have my lawyer, you’ll have your lawyer. And
we’ll tell our lawyers what we want in our agreement that in the
event that we separate, my property goes to my nephew or my
property doesn’t form part of our family property. And your
property doesn’t form part of your family property.”
So, that’s the whole purpose of a prenuptial agreement or a marriage
contract.
Emma: Great.
Dale: And then, over and above that, you’d want some of those things
stipulated in an up to date will, wouldn’t you?
Lorne: Yeah, there’s two different things.
Dale: That’s wills and estates law. That’s something a little
different.
Lorne: Yeah. A will deals with what happens when you die. A marriage
contract or a prenuptial agreement deals what happens when you
separate. So, a prenuptial agreement turns into a separation
agreement in the event that you separate. So, you’d be very wise
to go to a lawyer, different lawyers. You each have independent
legal advice. You each make full financial disclosure about what
your assets and liabilities are.
And you do it well before the marriage. Well before. You don’t want
to rush anything. Well before. And you do it in a real, calm,
rational…
Emma: Right.
Dale: Is your intended liking this kind of idea? Is he in agreement
with you?
Emma: He would. He is the type of the person who would. Because he
knows that my father had left that property to the family.
Dale: And he’d respect all of those things?
Emma: He would, definitely.
Dale: Okay. Thanks very much, Emma.
Emma: Thank you, as well.
Dale: When are you getting married?
Emma: Next year.
Dale: Next year? Okay.
Lorne: Don’t wait too long to get the agreement.
Emma: Thank you very much.
Dale: Thanks Emma, very much. Here is Mike on the line from Ajax.
Mike, do you have a question?
Mike: Good afternoon, gentlemen. How does a common-law affect home
ownership?
Lorne: Okay. Give me an example.
Mike: Well, it’s two people cohabitate and one owns the house.
Dale: What’s the claim?
Mike: [inaudible at 00:19:55] separate.
Lorne: Okay. So, you can have something called the cohabitation
agreement that deals with common-law couples and how they’re
going to deal with the house. So, a house, when you’re not
married, is not a matrimonial home, per se, as it is with
married couples. But it doesn’t stop a common-law spouse from
having a claim to the house. There’s been developments in the
law called joint-family ventures.
So, a court can say “Did you guys get together, pool your money, pool
your resources”? And it’s entirely possible for your common-law
spouse to have a claim on the house. Let’s say she did
improvements. Let’s say she took care, say you had kids
together. Maybe she took care of kids and you worked and she
made certain contributions. So, it’s entirely possible for her
to have a claim.
And the best thing you can do is also have some form of cohabitation
agreement.
Mike: Is there a time limit on that? I thought there was a two-year?
And you’re now married, so, it’s half hers.
Lorne: Oh, I see what you’re saying. So, common-law, the definition of
common-law is three years living together, permanently together
for three years. Or if you have a child together. And then,
you’re a common-law spouse.
Mike: Then you have a claim on her property?
Lorne: Okay, it’s her property? Yes, you would have a claim.
Mike: What if it was not in her name at that time, it was in trust?
Lorne: That’s complicated.
Mike: And then after you separated, it becomes in her name?
Lorne: Well, you would look at what happened. What the property was on
the date that you separated. So, it’s a complicated issue. You’d
have to look at the trust and so on. But it’s a little bit more
involved. It would be more of a difficult claim, I would think.
Dale: Mike, thanks very much for that question. And Lorne, thank you
very much for being here and answering all these questions.
Lorne: My pleasure. It’s a difficult area, it’s complicated. If people
want more information, they can go on my website.
www.torontodivorcelaw.com. And they can find information.
Dale: Torontodivorcelaw.com.
Lorne: And they can find information.
Dale: All right, Lorne. Thanks very much.
Lorne: Thank you. My pleasure.
Dale: Loren J. Fine, our divorce lawyer here on “Goldhawk Fights
Back.”
Do You Need Help with Prenup Agreements or Marriage Contracts in Toronto?
If you live in the Toronto area and you are looking for legal assistance with prenuptial agreements or marriage contracts, experienced Family and Divorce Lawyers Fine & Associates can provide the personal and professional services you need. Contact us through the form at the right, or visit our contact page.