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Jun

26

Prenup | Prenuptial Agreement Forms (Part 3): Tips to avoid having them challenged…

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 with respect to getting a prenuptial agreement, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. We will soon be offering Prenuptial Agreements in our Legal Forms + Video Guides section. You can contact me directly if you need a lawyer.

This is the third of a series of blog posts I’m writing about prenups or prenuptial agreements for Ontario. In the first blog, I discussed what they are, when are they used, and what is required for them to be valid and enforceable. In this blog, I’ll discuss how they can be challenged. In the second blog, I reviewed Loy v. Loy – a Ontario Superior Court of Justice case which reviewed the jurisprudence concerning how prenuptial agreements (and other domestic contracts) can be challenged. In this blog, I’m going to mention some tips that will help mitigate against future challenges to prenups.

Tip #1: Provide Adequate Disclosure
Adequate disclosure depends on the circumstances. Clearly, the assets, liabilities, income, etc. listed in Schedule “A” to the Prenuptial Agreement is a great start. But what about providing values? If it’s possible to put down approximate values of the most substantial items (e.g. assets, liabilities, etc.), then that would be a good idea. Sometimes, the person making disclosure can only guess – perhaps based on their knowledge.

Tip #2: Negotiate the Agreement
There will always be some issues that have to be negotiated, regardless of how significant or trivial they may appear to some people. The fact of the matter is that evidence of negotiation (i.e. that a party reviewed and put forward their own position – and perhaps even compromised to get a result) strengthens the view that the Agreement is valid and enforceable. Negotiating also means giving enough time for the parties to review and revise the Agreement; rushing things before the period of Prenuptial begins could be disastrous!

Tip #3: Draft Appropriately
The final agreement should reflect the negotiated agreement between the parties. Clear and simple language should be used. This will prevent the other side from saying that they didn’t understand the terms of the agreement. It will also help prevent a court from using its own interpretation to fix things. Remember: mistakes will not be looked upon favourably – particularly against the party who drafted the final Agreement!

Tip #4: Get Independent Legal Advice
To avoid having a party later claim that they didn’t understand or appreciate the nature or consequences of the Agreement is to make sure that they receive independent legal advice. This also helps avoid arguments that they were pressured or threatened into signing. One “no-no” that can be easily avoided is referring the other party to a lawyer. There are lots of lawyers out there who can review the Agreement, advise the other party, and render a certificate of independent legal advice; leave it to the other party to do this for themselves. Things can look bad for you if you arrange to do it for them!

Note: Independent legal advice is NOT a formal requirement under the Family Law Act (or under the common law) to have a valid and enforceable Prenuptial Agreement. That said, its presence helps to eliminate (except in the most exceptional circumstances) the ability for one party to have a court set aside the Prenuptial Agreement on the basis that it did not understand “the nature or consequences of the [Prenuptial Agreement]” or to set it aside “otherwise in accordance with the law of contract”. Basically, having an independent lawyer gives the impression that the lawyer’s knowledge and understanding is transferred to the party (because of the solicitor-client relationship and because it makes common sense). If it didn’t mean that, then the idea of having independent legal advice would be meaningless. One other thing: it is best not to have a party or their lawyer recommend a lawyer for the purpose of obtaining independent legal advice.

Independent legal advice is NOT a formal requirement under the Family Law Act (or under the common law) to have a valid and enforceable Prenuptial Agreement. That said, its presence helps to eliminate (except in the most exceptional circumstances) the ability for one party to have a court set aside the Prenuptial Agreement on the basis that it did not understand “the nature or consequences of the [Prenuptial Agreement]” or to set it aside “otherwise in accordance with the law of contract”. Basically, having an independent lawyer gives the impression that the lawyer’s knowledge and understanding is transferred to the party (because of the solicitor-client relationship and because it makes common sense). If it didn’t mean that, then the idea of having independent legal advice would be meaningless. One other thing: it is best not to have a party or their lawyer recommend a lawyer for the purpose of obtaining independent legal advice.

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