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The Importance of Financial Agreements in relationships

The Importance of Financial Agreements in relationships

Posted by Avery Zeidman | Published September 23, 2014

Marriage is a broad evolving term and depending on who you ask, can have varied definitions.  In the most basic terms, marriage can be seen as a social ritual based on cultural, economical, lawful and religious foundations.  It attempts to solidify long term sexual relationships between individuals who are together with the goal of procreating and or building a life together.

There are many reasons people choose to get married.  It is not a decision that should be taken lightly.  It has as many costly repercussions as it does benefits.  The decisions made in the onset of marriage help secure both parties throughout the marriage and its conclusion if that were the case.  

Starting a relationship can be exciting and rewarding.  Here in Ontario, there are many rules that govern the institution of marriage.  Whether or not you decide to get married, it is important to consider the financial aspect of the impending or existing relationship.  It may be a difficult and uncomfortable task to speak to your partner about finances but it is the only way to ensure that there is some semblance of fairness if ever the time comes to separate.  Some see it as taboo to do so or fear the thought of being labeled a gold digger but most people who have gone through a divorce or a break-up could tell you the advantages of having a financial agreement in place.

If you are to be married or already are married, you have the option of drafting a prenuptial agreement.  Common-law relationships can also benefit from financial security by drafting a cohabitation agreement. Both of these contracts enable you to settle your financial responsibilities in a manner that is agreeable to you both.  A huge advantage to drafting up the contract yourselves is that you both can share the assets and liabilities the way you see fit versus having this decided by a Judge in a court of law.

In order for this agreement to be legally sound, it has to be in writing.  It is advisable for each individual to get advice from their own separate lawyers before signing the written agreement.  This ensures that each person’s best interests are served.  The document has to be signed by both parties in the presence of two adult witnesses who will also sign.  Filing your contract in court allows a Judge to enforce the agreement if for some reason either party violates its terms.

There are a few key issues to address when drawing up a financial agreement.  The law in Canada allows only certain factors to be taken into consideration when theses financial contracts are drawn up.  Below are a few examples of what will not be legally binding.

  • Custody and child support cannot be decided or prepared in this type of contract.  Custody of children can only be decided when the relationship ends
  • For couples who are married, the rights of the marital home cannot be given up in the contract
  • Deciding whether or not a partner can engage in another relationship after separation is not applicable

You can however:

  • Decide together how the finances should be divided between the two of you
  • Conclude how much spousal support would be paid by one party to the other
  • Decide how the responsibility of debts will be disbursed if and when the relationship comes to an end

Your agreement can be changed at any time and should be done so with great consideration.  In these cases, a new agreement has to be drawn up, dated and signed by the witnesses.  It should also include full legal names, date of marriage or date of the beginning of cohabitation, joint assets, debts, etc.

If for some reason, either party decides that the agreement is not fair, and the dispute cannot be settled amicably, a trial would ensue to allow a Judge to settle the claim.  Generally, it is not wise to go down this path as a Judge would give more consideration to enforcing the original financial agreement.  There are however, instances where they might make an exception.  If there is a significant change in income, if one party was pressured into signing the contract or if the agreement is grossly unfair, the Judge can make the amendments that he or she sees fit.

Here at the Zeidman Law Offices, we have over twenty years of experience in our field and we would welcome the opportunity to represent you in your time of need.  Life is unpredictable but there are some steps you can take to control what you have worked so hard to achieve.  Call us today for a free initial consultation and allow us to help you through this sometimes lengthy legal process.

 
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