A marriage contract—or prenuptial agreement—explicitly states how a couple will divide assets in the event of a divorce. Marriage contracts can simplify the process of property equalization by designating specific property as the sole property of one spouse and not subject to division. They can also establish an agreement between the parties regarding spousal support if the marriage fails.
However, the impact of a prenuptial agreement in a Toronto high-asset divorce depends on whether the court will enforce it. You need a skilled local high net-worth matrimonial lawyer when substantial assets are at stake. Paul Riley could provide aggressive advocacy whether you hope to enforce a prenup or set it aside. Reach out to The Riley Divorce & Family Law Firm today to begin a case consultation.
Marriage is a legal and financial partnership, and the law says both parties are entitled to benefit equally from the fruits of the union. Wealth accumulated during the marriage must be split between the spouses, even when one spouse’s efforts or property generated the bulk of the wealth. If the value of an asset owned by one party at the time of marriage increases, they might be required to share the increased value with the spouse when the couple divorces.
A prenuptial agreement can exclude specific property from the calculation of net family property, which could significantly reduce a wealthier spouse’s equalization payment. According to Ontario Family Law Act s. 52, prenups can also address whether a spouse will receive ongoing spousal support if the marriage dissolves. If one or both spouses have children from a prior relationship, the prenup can designate specific property to be passed to the children as non-marital property.
Each party bound by a prenuptial contract should seek counsel from an independent family lawyer before signing the agreement. A spouse who did not receive an independent legal opinion might later argue that they did not understand the agreement’s ramifications or signed under the undue influence of their partner. A Toronto lawyer could help both parties understand the effects of a prenup agreement in a high net-worth divorce.
When drafting a prenup, full disclosure of all assets, future interests, and liabilities is essential. The court can set aside an otherwise valid prenuptial agreement if either party is not fully transparent. A person cannot consent to a prenuptial contract if they are not aware of the rights, obligations, and liabilities they assume when they sign.
When one or both parties have substantial assets, the disclosure process can be time-consuming and expensive. Someone might need to pay their accountant to prepare a financial statement, and the other party might require professional advice to evaluate it. Leaving ample time for these processes helps ensure that the agreement will be upheld if ever challenged.
A failure to accurately disclose debts or liabilities constitutes legal grounds to set aside a prenuptial agreement. An experienced family lawyer in Toronto could pursue or defend a challenge to a marital contract on this basis.
One of the most valuable aspects of prenuptial agreements is that they establish reasonable expectations. Each spouse enters the marriage with an accurate understanding of the other’s financial position and has the chance to consider its implications before marriage. Many couples use the negotiating process to consider how they will handle their assets and finances after marriage.
If the couple later decides to dissolve the marriage, each spouse has reasonable expectations from the property equalization process. A valid premarital contract can reduce the need for a legal professional to engage forensic accountants and asset valuation experts, speeding the divorce and reducing its cost.
Prenuptial agreements in Toronto high-asset divorces typically benefit children’s well-being as well. If neither party challenges the financial arrangements the agreement describes, the couple can focus on matters relating to their children free from the acrimony that results from property division disputes.
The impact of prenuptial agreements in a Toronto high-asset divorce will depend on the care that went into creating the marriage contract. Valid prenuptial agreements diminish the potential for property equalization disputes, reduce legal fees, and allow the divorce to be finalized faster. However, a poorly drafted or carelessly executed marriage contract can lead to bitter and protracted legal disputes.
When you and your spouse have significant assets, you need a financially savvy divorce lawyer. The Riley Divorce & Family Law Firm offers 24/7 availability, so call to discuss your concerns today.
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