Want A Prenup? The 5 Important Factors To Consider
While marriage itself is a contract, a couple can decide to write the contract themselves instead of accepting the default contract written by government legislators.
A Marriage Contract or Prenup or Prenuptial Agreement is a type of domestic contract where you and your spouse write out how you deal with issues while you are married or at the end of your marriage if your relationship breaks down and you decide to separate.
As such, a prenuptial agreement is a legally binding document and has increased in popularity due to the security it offers married couples if they ever have to go through divorce, especially where it has to do with property issues and spousal support.
Some Limitations of Prenuptial Agreement
- A marriage contract or prenuptial agreement cannot say who gets custody or access to any children if you separate. This is because decisions about children must be made based on what is in the best interests of the child at the time of divorce or separation.
- A marriage contract also cannot change each partner’s equal right to live in the home after they separate.
The 5 Important Rules of an Effective Prenuptial Agreement
While couples usually create a marriage contract to satisfy both parties’ needs and secure their individual rights, even the most comprehensive marriage contract can be challenged in court if a couple neglects any of these important factors in the course of creating the marriage contract.
The court will review a marriage contract and may nullify it if any of the following factors are not accounted for in the contract:
1. Full Disclosure of Assets
It is compulsory that both parties fully disclose their assets and debts to ensure that the contract terms are written based on an informed decision.
2. Independent Legal Advice
Both parties need to completely understand the contract since the parties will be giving up certain rights by signing the contract. It is important for both parties to obtain Independent Legal Advice to guide their decisions.
3. Presence of a witness
The prenuptial agreement must be executed by both parties before a witness.
4. No coercion or duress
The parties must enter into the contract freely and without any coercion or duress.
5. Force Majeure
Although a prenuptial agreement is considered legally binding, not all terms of the contract may hold up in court over time due to changes in circumstance, especially when when the change in circumstance involves children. In such cases the court will decide in the best interest of the child(ren), and this may require changes or nullification of the prenuptial agreement altogether.
Conclusion
Prenuptial agreement is a popular option among couples who want the flexibility of creating their own custom marriage contract. The rules covered in this article are all important. Overlooking or violating any of them can invalidate your prenuptial agreement.
Whether you are considering signing a prenuptial agreement or you are going through separation/divorce and need legal guidance, Narang Law has the expertise to provide you with the best legal advice backed by many years of experience in family law practice. Contact us today to move your case forward.
Satish offers professional legal advice and experience drawn from a multicultural background. He has spent his years in practice supporting clients through their family law, business law, real estate law, immigration law and wills and estates matters. He is able to find innovative solutions for his clients thanks to his rich, diverse background, which allows him to examine clients’ legal problems from a variety of different perspectives.
The Truth About Financial Disclosure During Divorce or Separation
Debt disclosure during divorce or separation - Family Law Of Canada
Duty To Disclose Debt And Other Financial Information During Divorce Or Separation
The parties involved in a separation or divorce are under obligation to fully disclose all debts, assets, any joint accounts and information about Private Corporation.
This may not be an enjoyable task but a duty to disclose financial information is the fundamental requirement in family law.
In order to properly negotiate or litigate family law cases, the parties must have accurate financial information about each other. This will lead to fruitful discussions about any financial issues and ensure a fair outcome between the parties.
Financial Disclosure During Divorce or Separation Involving Children
The obligation to disclose all financial information is also predominantly important when there is a child involved. Parents’ separation should not neglect the child and the child should be able to enjoy the same benefits and lifestyle that he/she had while both parents were together.
Disclosure becomes essential to determine the party’s financial situation and their ability to pay child support.
Non-disclosure of financial information can increase the time and expense of litigation and deprive the entitled party of their share.
Deliberately Hiding Assets, Income Or Debt During Divorce Or Separation
The consequences can be severe in a situation where one spouse deliberately hides assets or income.
A recent case Skoronski v. Hage, 2017 ABPC 153, establishes that the obligation to disclose is the responsibility of parents and their counsel. In this case, the respondent father was a beneficiary to a family trust. He refused to disclose full information about the family trust and claimed that he had no control over the trust.
Further, the Respondent’s counsel advised that he had a chance to review the information and his client had no control over the trust. However, the father, in fact, was the beneficiary of the trust. Consequently, the court dismissed the father’s appeal and awarded costs against the father and his counsel for delaying the disclosure process.
Evidently, the court can draw an adverse inference where parties deliberately hindered the financial disclosure process.
Narang Law can provide you expert legal advice backed by many years of experience to help you navigate the difficult process of divorce or separation. Contact us today to move your case forward.
Satish offers professional legal advice and experience drawn from a multicultural background. He has spent his years in practice supporting clients through their family law, business law, real estate law, immigration law and wills and estates matters. He is able to find innovative solutions for his clients thanks to his rich, diverse background, which allows him to examine clients’ legal problems from a variety of different perspectives.
How To Achieve Equitable Foreign Matrimonial Property Division
In recent times, it is has become common that many Canadian residents own foreign properties outside of their residential province. This new trend can be attributed to the increase of immigrant society in Canada and the ease of doing business around the world today.
Consider Existing Precedents of Equitable Matrimonial Property Division
During divorce proceedings and matrimonial property division in Alberta, if one or both spouses own properties outside of Alberta or even in another country, there is a clear path to achieving a fair and equitable matrimonial property division as per Matrimonial Property Act of Alberta (the Act).
In previous years, a spouse who didn’t own foreign property had no solution to bring other spouse’s foreign property into consideration during matrimonial property division in Alberta. In case Duke v. Andler (1932) S.C.R. 734, the Supreme Court of Canada declared that Canadian courts do not have jurisdiction over foreign properties and land.
However, the law has changed significantly in recent times. Canadian courts now have jurisdiction to deal with foreign properties during the division of matrimonial property upon break down of a marriage.
Section 31 of the Matrimonial Property Act of Alberta requires that each spouse shall file a statement with the Court and serve on the other spouse a statement, verified by oath, disclosing particulars of all the property of that spouse, whether it is situated in Alberta, or elsewhere.
Specifically, section 31 of the Matrimonial Property Act of Alberta states:
Disclosure of property by spouses –
31(1) If an application has been commenced under Part 1, each spouse shall file with the Court and serve on the other spouse a statement, verified by oath, disclosing particulars of all the property of that spouse, whether it is situated in Alberta, or elsewhere.
(2) A statement made under subsection (1) shall include particulars of property disposed of by that spouse within one year before the application was commenced.
(3) A statement made under subsection (1) shall
(a) be in the form, and
(b) contain the information,
prescribed by the regulations.
In case, Chikonyora v. Chikonyora 2013 ABCA 320, the Alberta Court of Appeal declared that there is a statutory obligation on each spouse to disclose all particulars of all their property whether situated in Alberta or not.
Matrimonial Property Division Involving Rental Income From A Foreign Owned Property
If your spouse is earning rental income from a foreign-owned property, the court has authority to take that fact into consideration when determining how to divide the property.
Why? By virtue of section 7(3) and 8(d) of the Act, a court is directed to take into consideration “the income, earning capacity, liabilities, obligations, property, and other financial resources” of each spouse both at the time of marriage and time of trial when making a property division.
It is worth noting here that if the court has jurisdiction “In Personam” over the spouse owning foreign property, the court can grant an order directing that spouse to take steps regarding the foreign property.
The court has a second option to grant a compensation order in which the court can direct the spouse owning foreign to pay monies as compensation to the other spouse due to having an interest in the foreign property.
However, the Alberta court does not have jurisdiction “In Rem” to make orders regarding foreign property because the foreign property is located in the foreign jurisdiction under the laws of the foreign country. The court does not have authority to grant an order regarding the foreign property.
In the case of Boodnarine Nauth v. Sheila Bijai 2017 ONSC 2022, the Superior Court of Justice of Ontario discussed jurisdiction issues as declared by Ontario Court of Appeal in Catania v. Giannattasio: “the general rule is that Canadian courts have no jurisdiction to determine title to or an interest in a foreign land”.
A limited in personam jurisdiction over foreign property may apply provided that four prerequisites are satisfied:
1. The court must have in personam jurisdiction over the defendant. The plaintiff must accordingly be able to serve the defendant with the originating process, or the defendant must submit to the jurisdiction of the court.
2. There must be some personal obligation running between the parties. The jurisdiction cannot be exercised against strangers to the obligation unless they have become personally affected by it.
3. The jurisdiction cannot be exercised if the local court cannot supervise the execution of the judgment…
4. The court will not exercise jurisdiction if the order would be of no effect in the situs. The mere fact, however, that the lex situs would not recognize the personal obligation upon which jurisdiction is based will not be a bar to the granting of the order.”
Conclusion
Under Section 7 (3) and Section 8 of the Act, an Alberta court has the power to do the unequal division of the property situated in Alberta to compensate for the foreign property of one spouse in order to make a fair and equitable division of matrimonial property.
For example, if a matrimonial home situated in Alberta has $550,000.00 fair market value and the other spouse has sole ownership of foreign property for the fair market value of $600,000.00, the court has the power to transfer matrimonial home situated in Alberta to the spouse who does not have control and ownership of foreign property. The court can order the foreign property owner spouse to pay remaining money over a period of time with or without interest as per section 9 (3) of the Act.
This means that if your spouse owns a foreign property during your divorce, it is appropriate to request an order for unequal division of matrimonial property situated in Alberta for which Alberta court has authority to consider.
section 9(1) of the Act authorizes Alberta courts to distribute property situated in Alberta in a manner that equalizes the foreign-held assets of one or both of the spouses.
Section 9(1) provides:
9(1) If part of the property of the spouses is situated in Alberta and part elsewhere, the Court may distribute the property situated in Alberta in such a way as to give effect to the distribution under section 7 of all the property wherever it is situated.
It goes without saying that a court would require disclosure for property located outside the province of Alberta in order to discharge this function properly.
For more advice and guidance with your divorce process and division of matrimonial property, contact Narang Law today. We’ve helped hundreds of clients navigate the divorce process with sound legal assistance in Calgary and surrounding areas.
Satish offers professional legal advice and experience drawn from a multicultural background. He has spent his years in practice supporting clients through their family law, business law, real estate law, immigration law and wills and estates matters. He is able to find innovative solutions for his clients thanks to his rich, diverse background, which allows him to examine clients’ legal problems from a variety of different perspectives.
Matrimonial Property Division – Parental Gift or Loan
matrimonial property division - Calgary Divorce Lawyer - www.sknlaw.ca
Assume A Common Scenario
A young couple is about to marry. The parents of couple are happy and ready to support the couple to start their new life together. At time of marriage, the bride or groom receives money from the parents of one of them or both of them. In this type of situation, there is no documentation of transfer of funds because it is a gift from proud parents. After marriage, the couple starts living together as husband and wife. After few years of marriage, the husband and wife are having differences and they decide to proceed with divorce and matrimonial property division which is not pleasant for them.
At the time of matrimonial property division, the husband and wife may be in complete disagreement in regards parents’ monetary advances. The issue is whether the parents gave the money with the expectation of repayment and whether they intended the money for one or both parties in the marriage.
The memories are not clear and the husband and wife are not in good terms due to the split. Each of them is interested in using the monetary gift for self-serving purposes.
Parental Gift or Loan?
It is important to note that gift and loan are treated very differently under Matrimonial Property Act of Alberta.
In divorce proceedings or an ADR Process , it has to be determined whether the parent’s money was a loan or gift. Parental loans and gifts are subject to specific legislated rules.
In determining each spouse’s net matrimonial property portion, parental monetary gifts will be counted as debt if the monies were a loan to both spouses with promise to repay.
If the parental monetary gift is truly a gift to both spouses during the marriage, then the matrimonial assets list will include the gift. The gift will then be divided as part of the agreed course of asset division.
Classifying a parental gift is more complicated when it is not clear if the parent(s) gave the monies as loan or gift.
For divorce proceedings, the courts have set and listed various key factors to resolve cases like these. In determining whether a parent’s monetary advance is a loan or gift to an adult child, the courts consider the following factors:
- Whether there were any coexistent documents evidencing a loan
- Was a method for repayment specified?
- Whether there is security held for loan
- Whether there were advances to one adult child and not others, or advances in unequal amounts to various adult children
- Whether there was any demand for payment before separation of parties
- Whether there have been partial repayment
- Whether there was any expectation, or likelihood of repayment
Self-Serving Evidence In Matrimonial Property Division
The courts are cautious regarding self-serving evidence. This is when one spouse wants to use self-serving evidence in order to feed a matrimonial property claim. In the given scenario, the outcome depends on the circumstances and facts.
Help You Can Count On
It is important to discuss with a lawyer when you consider giving these types of gifts and loans to an adult child at the time of marriage, and during the course of marriage of an adult child because things can change in the future. Contact Satish Narang for helpful tips and advice to help you accurately navigate your matrimonial property division case.
Satish offers professional legal advice and experience drawn from a multicultural background. He has spent his years in practice supporting clients through their family law, business law, real estate law, immigration law and wills and estates matters. He is able to find innovative solutions for his clients thanks to his rich, diverse background, which allows him to examine clients’ legal problems from a variety of different perspectives.