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Marriage contracts force couples to have big talk

Marriage contracts can be useful to different types of couples — not only parties with significant assets — and should be discussed well in advance of a wedding date, Toronto family lawyer Erin Chaiton-Murray tells AdvocateDaily.comWatch video

“I think that as people are now getting married more often later in life, or perhaps after they’ve been working for a number of years and they’ve accumulated some assets, in those circumstances, it’s certainly worth considering whether a marriage contract might be appropriate,” she says.

“In particular, people who have been married before, have gone through a separation or divorce and are coming to a marriage with some assets and perhaps children from their first marriage ... in those circumstances in particular, it’s a really useful thing to consider a marriage contract.”

The contract is essentially a conversation about money, says Chaiton-Murray, Senior Associate with Fogelman Law, noting both parties will be required to disclose all their assets and liabilities.

The individuals would also be advised to consult with a lawyer before signing a contract, she says.

“I think the conversation itself in negotiating and discussing a marriage contract can be useful for a number of reasons,” she says.

“It helps people to have what can be a big conversation on how they imagine their financial lives to play out and what they see as a potential in terms of how things would work in the future in case they were to separate. Those are conversations people don’t always have before they get married, so I think that can be an important discussion.

“I think it also provides an opportunity for people to understand what the law provides for if they are to separate in future, which I don’t think most people think about or are aware of at the time that they’re getting married.”

A common scenario, says Chaiton-Murray, is when one party’s family requires the new spouse to sign a contract as a matter of protecting assets.

“That’s not an uncommon situation if there’s a family asset or some type of family business that family members are concerned about making sure it’s adequately protected in the event that there’s a separation down the road,” she says. “It happens fairly regularly."

Timelines are extremely important for couples signing marriage contracts, says Chaiton-Murray, who advises clients not to make such decisions too close to the wedding date.

“Something we like to consider is making sure there’s adequate time to get a contract negotiated and finalized well in advance of the wedding,” she says.

“If the contract doesn’t get signed before the wedding, parties can enter into what’s called a standstill agreement, which essentially puts everything on hold and then you continue to negotiate and finalize the contract after the wedding when there’s a little less pressure on everyone in terms of time and deadlines.”

While people are often concerned about legal costs associated with drafting and reviewing a contract, Chaiton-Murray says it’s likely less expensive to ensure it’s properly taken care of before the marriage rather than at the time of separation.

“It’s better to spend the money up front and understand your rights and what the law would provide for in the event that you separate and understand what the options are,” she says.

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