Oct 2024
Collaborative Process: Marriage Contract
By Jennifer Black
Benefits of Using the Collaborative Process to Prepare a Marriage Contract or Cohabitation Agreement
Marriage Contracts or Cohabitation Agreements are the types of contracts that are the most challenged in family law matters. Therefore, it is important to do everything you can to build the most solid agreement possible.
Some of the main reasons marriage contracts or cohabitation agreements are set-aside by the court are:
- A failure to disclosure to the other partner significant assets, or significant debts that they had at the time of entering into the agreement.
- A partner not understanding the nature and consequences of the agreement
- Undue influence at the time of signing
- There was duress at the time of signing (the classic example is being asked to sign a marriage contract only days before the Wedding)
- There was a mistake as to an essential element of the agreement
- There was a fraud or material misrepresentation
- Spousal support provisions that would result in unconscionable circumstances
Using the collaborative process to enter into a marriage contract or cohabitation agreement is one of the best ways to ensure you are building a strong and durable agreement.
Using a collaborative process means that you and your partner are working together to build an agreement that is acceptable to both of you. An advantage of the collaborative process is that you are having discussions together with lawyers present which leads to more balanced agreements. As needed a financial professional and/or family professional may also be involved to provide expertise that may be needed in order to have the information and support each partner needs in order to enter into the marriage contract.
Before entering into a marriage contract, it is important to have knowledge and understanding of each partner’s finances so that everyone can make informed decisions. Full financial disclosure is necessary in order to have a valid agreement that will stand the test of time. Section 56 (4) (a) of the Family Law Act, provides that a court may set aside a domestic contract (such as a marriage contract or cohabitation agreement), if a party failed to disclose to the other significant assets or significant debts or other liabilities existing when the domestic contract was made. The Ontario Court of Appeal in LeVan v. LeVan, 2008 ONCA 388 (CanLII), has made it clear that financial disclosure is paramount in these types of agreements and that includes not only fully disclosing the assets but also the value of the assets.
In using the collaborative process, sometimes there is a meeting held to discuss what financial documentation needs to be obtained and exchanged. There may also be a discussion about any valuations that may need to be obtained. Other times instead of a meeting there may be a call between the partner’s lawyers to discuss the exchange of financial disclosure so that that information is gathered before an actual meeting is held. Once financial disclosure is exchanged then a meeting is held with both partners and their respective lawyers in order to discuss what each partners’ goals are for the agreement and to negotiate the terms of the agreement. Once both partners have agreed to the terms that are to be put into the agreement then the agreement is drafted. In the collaborative process generally both lawyers will draft the agreement together. Often one lawyer will prepare the first draft and provide it to the other lawyer and once both lawyers believe that the agreement reflects the agreed terms reached in the collaborative meeting it is provided to the clients for review with their individual lawyer.
The result of using the collaborative process, for negotiating and entering into a marriage contract or cohabitation agreement is that it tends to result in more balanced agreements, that both partners can live with, as it was put together by both partners. As well, the collaborative process requires the exchange of financial disclosure which is an integral part of the process of having a marriage contract prepared. If you use the collaborative process to prepare your marriage contract then it is much harder for one partner to argue that they did not understand the terms of the agreement as they have a lawyer that has assisted them throughout the process and not just one meeting with a lawyer to review and sign the agreement the same day. The collaborative process makes it more difficult for a partner in the future to argue duress, as the agreement was negotiated over time.