Dentists and Prenuptial Agreements
Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice, contact me (Michael Carabash) or David Mayzel.
Prenuptial Agreements | Marriage Contracts
A “Prenuptial Agreement” is a written contract between two people who intend to be married. A Prenuptial Agreement refers to the fact that it is entered into BEFORE marriage. During the course of the marriage, however, the couples may enter into a similar contract which is called a “Marriage Contract”. The name doesn’t really matter: it’s just important to realize that they can be entered into prior to or during the marriage. These Agreements deal with the parties’ respective rights and obligations during and after their marriage (or on death) and can deal with things like: ownership or division of property, support obligations, the right to direct the education and moral training of children, and any other matter in the settlement of their affairs (s. 53 of the Ontario Family Law Act). Importantly, a Domestic Contract CANNOT say who will have custody of, or access to, children if the relationship ends. Furthermore, a Domestic Contract cannot prevent a spouse from being in possession of the matrimonial home – irrespective of who owns it! This is discussed in greater detail below. Finally worth mentioning is that a Domestic Contract does not need to deal with all rights and obligations concerning the relationship: it can only be concerned with one asset (e.g. a house, the shares of a dentistry professional corporation, etc.) or one obligation (e.g. support to one party upon termination).
When are they used?
Domestic Contracts are used by couples who are not necessarily living together but who plan on getting married. They are used by parties who want certainty, predictability and control over their financial affairs in case the relationship breaks down. There are a number of reasons why couples or particular spouses may insist in having a Domestic Contract. First, a spouse who is wealthier than the other spouse may want to avoid having to share their increased wealth if and when the marriage breaks down. With a Domestic Contract, certain assets – such as pensions, real estate, the shares of a dentistry professional corporation etc. – can be kept away from the other spouse if this happens. Second, a Domestic Contract can be used to make special arrangements for particular property in which one or both spouses have an interest. Such property may include business interests (e.g. dentistry professional corporations). A Domestic Contract may allow the parties to determine who owns what upon a breakdown of the marriage, instead of just having legislation and courts make that determination. Finally, a Domestic Contract can be used to establish specific spousal obligations in advance of the marriage breaking down.