Marriage contracts (also known as “pre-nups”) may not be the most romantic topic for couple about to get married, but they can be incredibly important for people who are looking to protect their asses and interests in the event of a breakdown of a marriage, including spousal support obligations. They can also be used to help avoid conflict and litigation following a separation by clearly addressing many of the issues that separated couples commonly battle over. Of course, just because a contract is in place does not mean there is not a potential for litigation. This was the case in a decision recently issued by the Court of Appeal for Ontario.
The couple met in 1992 and began living together in 1993. The husband was 15 years older than the wife. While it was the husband’s second marriage, it was the wife’s first. When the couple began living together they executed a cohabitation agreement. It was dated July 19, 1993. The cohabitation agreement contained a release which provided that neither party had the right to receive support from the other party of the other party’s estate. They were married in 1996 and signed a marriage contract on December 6, 1997. Like the cohabitation agreement, it also contained a spousal support release where each spouse stated they were financially independent, and that neither would seek financial support from the other. It also stated that the wife would be the beneficiary of the husband’s RRSP and group life insurance policy. A number of amendments were made to the agreement as the years went on, specifically in relation to property the couple purchased. The home they were living in at the time of the husband’s death was held by the couple as tenants in common, which meant the husband’s estate was entitled to half of it. The husband had also won the lottery, collecting a $1,000,000 prize.
The husband died on November 1, 2015. Following his death, the wife applied to receive spousal support from the estate. She was seeking $2,500 per month for life. She asked for that to be converted into a lump sum of $300,000. Her argument was that the spousal support release contained in the marriage contract was invalid. She also sought sole ownership of the matrimonial home.
At the first trial, the court wrote,
“There is nothing in the circumstances pertaining to the negotiating and execution of the Marriage Contract which calls into question its validity or fairness. (The wife) agreed to the spousal support release in return for concessions favourable to her. She made it clear to her lawyer that she would only sign an agreement on her terms. She did not achieve all of her goals but she obtained, through negotiation, changes and additions to the initial drafts of the agreement which were important to her.
“I am satisfied that the provisions of the Marriage Contract operated fairly towards (the wife) at the time of (the husband’s) death. It would have been in the contemplation of the parties that (the husband) would likely predecease (the wife). (The wife) assets increased in value by more than $1 million over the course of the marriage. (The wife) was at all times aware of (the husband’s) objective to not be burdened with a spousal support obligation in the event of a separation or his death. The parties of course did not anticipate winning the lottery but that, in my view, was a significant factor in allowing the parties to enjoy the lifestyle and acquire the assets that they did. When (the wife) terminated her employment it must have been within her contemplation that (the husband) would likely predecease her and that she would have difficulty replacing the income that she had been earning by working full time.”
The Court of Appeal for Ontario upheld the lower court’s decision, writing her argument,
“fails to take into account the two significant amendments to the marriage contract negotiated by the parties. Both referred specifically to the title to the matrimonial home and, read together, make it absolutely clear that the home would be held in tenancy in common with certain rights to the appellant upon the respondent’s death. Neither amendment detracts from the waiver provision found in the original contract.”
The court found no clearly identifiable error in law or palpable and overriding factual error in the original decision. As such, the marriage contract was ruled as valid.
The experienced family law lawyers at NULaw have a great deal of experiencing drafting as well as reviewing marriage agreements. We help our clients fight to enforce marriage contracts, helping them secure what they are entitled to . We strive to help our clients protect their assets and plan for a new life. Please contact us online or by phone at 416-481-5604 to book your consultation today.