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Often referred to as "Prenuptial Agreements," these types of domestic contracts actually fall under two separate headings; although each is very similar to the other.  The only difference is timing: one is done before a marriage and the other after a marriage.  

Marriage contracts and cohabitation agreements allow you to pre-plan how your support obligations, assets, and liabilities will be handled in the event of a breakdown of your relationship (married or not).  They allow you to step outside of the legislation and common law rules and make your own arrangements, specifically tailored to the facts of your relationship and individual financial circumstances.

Spousal support truly is the last 'wild west' of family law, and an issue that presents itself in the same manner for both married and unmarried couples.  Unlike child support, spousal support is not automatically payable on the breakdown of a relationships.  One party must request it and the other must either agree or disagree with paying it before it becomes an issue.

Whether or not a claimant is entitled to spousal support is a complicated test that generally requires a detailed record of the relationship, the roles taken on during the relationship, and the economic effects of the relationship on each party.  There is a significant amount of discretion available to a Court on whether or not spousal support is payable.  Any Judge on any day can find differently.  It is also an expensive request to make, with uncertainty and risk to both the payor and recipient. 

But the issue does not end there.  Once it is determined that a claimant is entitled to receive spousal support, the question of quantum and duration must be answered; how much support and for how long?  This is another area where a Court has considerable discretion.  

For example, in a 6 year cohabitation (married or not) where there are no children and the parties to the relationship are each employed, with one making $80,000 annually and the other making $120,000 annually, there may be no spousal support payable.  At most, the higher earner would pay the lower earner a small amount of spousal support for in or about half the duration of the cohabitation.  

However, if you keep that same fact scenario and add a three year old child of the relationship to the equation, the higher earner could very easily find themself paying spousal support until the child's 18th birthday, and at an amount that would equalize the incomes of the parties over that 15 year period.  In this common situation, the payor of spousal support will be paying spousal support for nearly three times the length of the cohabitation.

Using a Cohabitation Agreement or Marriage Contract can help both parties manage their support obligations and expectations in the event of a breakdown of the relationship.  With an agreement in place, both parties can move forward in the relationship with similar understandings and expectations of how their finances will be managed and what they need to do for their own financial support.  

A marriage creates an automatic and equal financial partnership.  Everything you accumulate in assets or incur in debts, from the date of marriage forward, whether in your name, your spouse's name, or in your joint names, is equalized by value on the breakdown of the marriage.  If you bring an asset into the marriage, you still share the value of that asset, but only the increase in the value of that pre-existing asset from the date of marriage forward.  The intention of the legislation is that you both walk away with the same "profits" of the marriage.  

The exception to this is the matrimonial home; that is, the home you are living in on the day the relationship breaks down.  The full value of the matrimonial home is shared equally with your spouse.  There is no date of marriage deduction for the value of the home that you brought into the marriage.  This means that, if one party owns a home prior to the marriage and moves their new spouse into that home, they are instantly losing half the equity they accumulated before the marriage (and maybe even at a time before they even knew their spouse).  Protecting equity in the matrimonial home is one of the primary reasons we do these agreements for our clients.  

However, both Cohabitation Agreements and Marriage Contracts can also be used for parties who want to protect their:

• inheritances
• gifts from extended family
• business interests
• real estate investments
• pensions
• retirement savings, or
• to level the playing field when one party is bringing significantly more resources into a relationship than the other.  

In short, if it is an asset that you have now or may acquire later, and want to protect it, we can create an agreement that either limits or eliminates the sharing of the value of that asset and keeps the ownership and equity with you, either in full or in part.  

A Cohabitation Agreement or Marriage Contract is the best and easiest way to protect your assets from the uncertainty of a breakdown of a marriage or cohabitation.  

• Marriage Contracts and Cohabitation Agreements cannot pre-determine parenting arrangements.  Parenting is tied to the best interest of the child at the time of the breakdown of the relationship.  Given that we cannot predict if there will even be a breakdown of the relationship and are often drafting the agreements before there are any children of the relationship, we definitely cannot predict when it will happen, how old the child(red) will be, what condition the children will be in, what condition the parents will be in, and who will be able to provide for the children. As a result, any effort to pre-determine parenting is of no value and would not be binding on either party, nor the Court in the event of a later breakdown of the relationship.  

• Marriage Contracts and Cohabitation Agreements cannot pre-determine child support.  Child support is regulated, quantified, and required by the Child Support Guidelines.  The Guidelines base child support on the parenting arrangements, the number of children, and the income of the payor parent.  All of these things depend on the situation at the time of the breakdown of the marriage, making any effort to pre-determine them a waste of time and unenforceable. 

• Marriage Contracts and Cohabitation Agreements cannot be "unconscionable."  That means they cannot be so imbalanced that no person in their right mind, fully appraised of the situation, would have signed it.   Take for example a situation where one party to a relationship is in the workforce earning a good income, accumulating savings, perhaps a pension, and owns the home they live in.  Meanwhile, the other party has left the workforce to focus on raising the children, is not earning an income, and has little to no assets.  We could not put in place an agreement that denied the stay at home spouse spousal support, and gave them no interest in the home and no share of the matrimonial property.  Were the relationship to come to an end, they would be out on the street with nothing, all because of decisions made during the marriage.  That would be considered unconscionable and the agreement set aside.   These parties would still be eligible for an agreement, but it would have to be structured to provide something to the stay at home spouse to allow them to get back to self-sufficiency.  The focus there would be quantifying what that spouse would receive, rather than keeping income, assets, and liabilities completely separated.

There are three requirements for a properly done Cohabitation Agreement or Marriage Contract:

1. The language of the agreement itself - It is important that the language of the agreement does what you want it to, can easily be interpreted by a Judge if either party later tries to set it aside, and is written in language that both parties signing it can understand.  The language of the agreement should provide for a breakdown of the relationship while both parties are still alive and in the event of a death, so there are estate planning considerations as well.  These agreements should always be drafted by a lawyer.  Kitchen table agreements and those drafted by AI are more likely to be set aside for failing to meet the drafting requirements of clarity, comprehensiveness, and conforming to provincial legislation.  
2. Financial disclosure - You must exchange statements of your income, assets, and liabilities as of the time of the agreement before signing it.  All income, assets and liabilities, and their values, must be put on the table before you can agree how they will be divided.  You cannot contract into our out of support and property entitlements without knowing what the other party has or does not have, and what your entitlements or obligations may be both with, and without, an agreement in place.   
3. Independent legal advice (ILA) - Both parties to an agreement must have independent legal advice. You both need your own lawyers.  While one lawyer can do all the leg work of collecting the disclosure and drafting the agreement, the other party needs their own lawyer to review and go over with them in detail the agreement.  The purpose of ILA is twofold; 1) to ensure the party signing it understands what they are getting and/or giving up, and 2) to protect from either party seeking to have the agreement set aside based on a claim by the other that they did not understand it or were under duress.  It is the role of the ILA lawyer to ensure their client understands the agreement and is not under duress, and that lawyer will sign and "ILA Certificate" confirming they reviewed it with their client, that they understood it, and that they were not under duress in signing.

With the above three requirements in place, you will have an agreement you can rely on and that is far less likely to be set aside if later challenged by the other party.  If you do not intend to complete all three requirements, the agreement is not worth doing.  Think of it as a three legged stool with one leg removed; it will not stand on its own and will fall over if pushed.