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  • Shankar Law Office

How Not to be "Taken to the Cleaners"

As this title states, it implies that one or both parties at the end of a divorce of a couple or separation for a non-married couple are going to land at the cleaners post separation! This means that one or both parties are going to lose heavily financially, of course, not taking into account the emotional after effects of a lengthy and complex litigation.

Having seen numerous cases like this, one way to prevent this from happening for both married and unmarried couples is to enter into either a prenuptial agreement or a domestic contract prior to living together.

Recently, there was the case in the United States of celebrity couple Tom Brady and Gisele Bündchen separating. News reports however, indicated that the separation and divorce was finalized in just three days time from the time of separation! This is because apparently, they both had iron clad prenuptial agreements that they had entered into prior to the marriage. They had two children together.

Pre-nuptial agreement for married or a domestic contract from married couples would likely help both parties deal with their financial issues, especially at the time of separation.

For example, for a married couple invariably each spouse will be entitled to half the value of the pension amount of the other spouse during the period of marriage, in addition to half if the sale proceedings from the matrimonial home, depending on whether or not either, or both parties are on title, and equalization, including jointly held assets, investments, etc.

Similarly for an unmarried couple, the parties would be entitled to serious trust claims against the other. So, for example, an unmarried couple lives together and has children together, raises these children together, despite having separate bank accounts, and partakes in the maintenance and cleaning of the home. Only one person has title to the house. Despite this, after separation the party not on title to the house can still make a trust claim for a huge monetary award against the spouse who has title to the house. If the spouse with the title to the house is unable to pay, the untitled spouse may make a claim to include the value of the house to pay off against the claim that the untitled spouse is asking for. This is because the court considers such a relationship to be a joint family venture, which is almost close to that of a traditional marriage.

In other words, in a traditional marriage, there are set issues of relief that can be asked for. The term joint family venture is simply one by which unmarried couples can obtain almost the same relief that a married couple is able to obtain post separation.

But if each party were to sign carefully crafted and well thought out prenuptial agreement for a married couple, or a domestic contract for an unmarried couple, many of these problems could potentially be avoided post-separation.

Legal advice for each party is essential for the success of ensuring the integrity of such a contract if challenged in the courts later.

Such a prenuptial agreement, or domestic contract would carefully delineate the rights and responsibilities of each party to the union including their current assets, what they bring into the relationship or marriage and more importantly, what happens upon separation, and what each party would get confirming that each party has had legal advice and thinking this through as to what they’re going to obtain if ever they separate.

Importance of legal advice is because post separation if one of the parties goes to court and says that they did not intend to sign such an agreement and they did it without realizing the consequences - as long as there was thorough, full and complete legal advice provided, it is my opinion that it would be very difficult to reverse such a claim for such an agreement or contract.

Such a prenuptial agreement or domestic contract is a binding contract on both parties. When properly crafted, it would be next to impossible to reverse it. One reason for reversing it is if there was a lack of full and frank financial disclosure at the time of entering into such an agreement or contract. Otherwise, it is my opinion that a Court would be hesitant or reluctant to strike down such a contract.

Please contact us for further assistance. Shankar Law works all over Ontario and have offices in Port Elgin, Owen Sound and Wiarton. We are happy to serve you.



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