Family Law Blog

Can Marriage Contracts Force Spouses to Pay Money For an Affair?

 Spouse Caught Cheating


Many spouses get marriage contracts, before or after the wedding, to provide predictability on separation and to make the marriage, and any separation "more fair.”  Common law couples use “cohabitation agreements” to do the same things.  The video and podcast below explain marriage contracts and cohabitation agreements in more detail.  Frequently, they are used to set out how the spouses will deal with money and their homes during the marriage or relationship and how spousal support and property division will work in the event of a separation.  Some time spouses want the way money is addressed to change if one spouse is unfaithful - some even want a “fine” paid to the innocent spouse immediately.  Such clauses in a marriage contract or cohabitation agreement are called “lifestyle clauses”.  They are very common among celebrities. 




In some jurisdictions, lifestyle clauses can go pretty far, such as imposing a weight requirement for a spouse.  Such clauses can seem pretty extreme.  But, in an error where the law says there is “no fault divorce”, ultimatums about infidelity are among the most popular lifestyle clauses in domestic agreements.  Obviously, such clauses raise questions about the trust the spouses have for each other, and whether fidelity is the best way to determine a spouse’s financial well-being after separation. 

 

There’s been quite a few celebrity couples who have made use of this specific lifestyle clause. One for example is Justin Timberlake and Jessica Biel. Biel reportedly gets compensated at least $500,000.00 if Timberlake cheats on her.  This is an example of a unilateral cheating clause, but other couples are entering marriage contracts with clauses that have penalties if either spouse cheats.  

 

But these clauses aren’t just for celebrities – the general public is making use of them as well. And there are some sensible reasons behind this. As ‘fault-based divorce’ is no more. Section 5(1) of Ontario’s Family Law Act makes the division of property based on math not conduct, and infidelity is not one of the grounds on which property division cane be changed under section 5(6).  Section 33(10) of Ontario’s Family Law Act specifically says that the conduct of one (or both) spouses is not a factor in setting spousal support.  Under the Family Law legislation, adultery does not affect how money is divided on separation.


However, section 52 of the Family Law Act (section 53 for common law couples) says that how both property division and spousal support are determined can be change by way of a marriage contract or cohabitation agreement.  Further, section 56, with sets out what terms are illegal in marriage contracts and cohabitation agreements, does not prohibit clauses that punish infidelity.

Ontario Family Law Podcast

 

Many couples will include an infidelity clause in their marriage contract to 1) ensure their financial well-being and 2) prevent (or try to prevent) their spouse from cheating.   

 

33 - The Law of Marriage Contracts & Cohabitation Agreements

4 - How to Have an Enforceable Marriage Contract

Reportedly, when Elin Nordegren was contemplating getting back with Tiger Woods she wanted an infidelity clause inserted into their prenup with a $350 million financial penalty for Woods if he were to ever cheat again.

 

However, where lifestyle clauses are not carefully drafted, there can be problems.  The most obvious is when the marriage contract does not specify exactly what is meant by “cheating”? Are scandalous text messages going to count? Does there have to be actual nudity?  Another problem is what is the standard of proof to establish that there was cheating.  If the contract is not clear, then separated spouses can end up in lengthy, expensive litigation with no guaranteed outcome. 


There is also a question about whether a Family Court Judge, used to a the “no-fault divorce” system would enforce an agreement that imposed consequences for fault.   A guilty spouse challenged whether a lifestyle clause was even legal in the 2002 California case, Diosdado v Diosdado.  In that case, the Court of Appeal for the Second District held that the clause in the “Martial Settlement Agreement” (the equivalent of a marriage contract)  was not enforceable because it was contrary to the public policy underlying California’s no-fault divorce laws.  Although this case is not binding on Canadian Family Courts, there is a similar approach to Divorce in Canada.  


However, contrary to the Diosdado decision, other court decisions from the United States have found the clauses to be enforceable, so long as the infidelity can be proven and the domestic agreement does not violate state law. 

 

With regards to Canada, the D’Andrade v Storage decision provides some insight as to how Canadian courts are likely to respond to an infidelity clause in a marriage contract or cohabitation agreement. In that case, the court rejected the argument that an affair during the negotiations of a marriage contract, that was negotiated after the parties were already married, would void the agreement. The court stated:

In recognition of the fact that marriages are complicated institutions, whose failure can rarely be attributed to one party or the other, the law has evolved in a fashion that by and large eliminates conduct from the analysis of financial entitlement…

…it is important to consider the purpose of the contract in question. It is not to enforce personal obligations such as the duty to remain faithful or the commitment to remain in the relationship. While people may feel that these obligations are part of the marriage “contract,” these are not the obligations that domestic contracts are meant to deal with.


There has not yet been a reported Canadian Case that has upheld or invalidated a lifestyle clause in a marriage contract or cohabitation agreement.  While the Family Law and Divorce statutes do not prohibit such a clause, they do seem to run against the general “no fault principals” of those same laws.  Until there are court decisions about such clauses, it is not clear whether they will be enforced if a couple separates in Canada.  Still, as such clauses are not prohibited they can be included as a good family lawyer will draft a marriage contract in such a way as to ensure that the rest of the contract survives, even if the lifestyle clause does not.    It will always be difficult for a cheating spouse to convince a judge that he or she should be able to invalidate a clause to which he or she freely agreed.   Some judges will see that as “cheating” again.

Guide to the Basics of Ontario Family Law (book)

If you need more information about how to protect your assets or wealth during your marriage or common law relationship and after separation, pick up this best selling, easy-to-understand  book on the Basics of Ontario Family Law, which has sections that fully explain marriage contracts and cohabitation agreements and an extensive explanation of what will happen if you do not have one of these contracts for your relationship.  The book is not only available as paperback, but also as a $9.99 e-book for KindleKobo, or iPad/iPhone/Mac.  

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Guide to the Basics of Ontario Family Law Available on Kindle

                    

You may also want to listen to the Ontario Family Law Podcast episodes on:


One of the rules for having an enforceable marriage contract or cohabitation agreement is that both sides must speak to a lawyer and get independent legal advice one the contract. To find out whether contract is right for you, how the law applies specifically to your situation and what steps you should take to get things to work out for you, contact Certified Specialist in Family Law (and author of the book above), John Schuman, by emailing him, calling 416-446-5869, or using the contact form below.  We answer all inquiries promptly and we can arrange for you to come in quickly for a consultation (charged at a reduced hourly rate). 


Many thousands of people get family law assistance from this website everyday.  If you have found this page useful, please share it on your social network using the Facebook, Twitter, LinkedIn and Pinterest buttons at the bottom of the page.  Please comment on this page using the comments section at the bottom to share your thoughts on money issues in divorce or separation.


Contact John Schuman


Am I Responsible For My Spouse’s Bad Investments If We Divorce?

Calculating Family Finances


On the breakdown of a marriage (but not a common law relationship), spouses "equalize" their assets and liabilities and share, with some exceptions, the growth in their net worth during the marriage.  The video below explains “Equalization of Net Family Property in greater detail.


Many separating spouses can feel that the equalization process can be unfair - particularly where one spouse has spent money on stupid things, gambled it away, is getting a windfall due to the division of the matrimonial home, or it has been a very short marriage.  In these, and other situations, dividing up all property "50/50" can seem unfair. 

Section 5(6) of Ontario's Family Law Act does allow a Court (or Family Arbitrator) to deviate from the usual equalization of Net Family Property and divide the family's wealth another way.  It accommodates all of the scenarios above and a few others.  

However, the test that the Family Court (or arbitrator) has to use is not whether the normal "equalization" would be unfair. Section 5(6) says that to deviate from the normal equalization, the Court must be "of the opinion that equalizing the net family properties would be unconscionable."   "Unconscionable" is much more than just unfair.  The case law says that it means that the usual result must be "shocking to the conscious of the court."   That is much more than just unfair.  One spouse spending a lot of money on an affair is not enough.  A spouse spending too much is not enough.  Justice Jennings put it this way

The result must be more than hardship, more than unfair, more than inequitable. There are not too many words left in common parlance that can be used to describe a result more severe than unconscionable.

Ontario Family Law Podcast

8 - How your heart can get you into financial trouble 

13 - Spousal Support in Ontario and Canada

30 - Entitlement to Spousal Support

33 - The Law of Marriage Contracts & Cohabitation Agreements


Specifically on the issue of investment losses, the Courts have held that improvident (stupid) investing is not enough to justify an unequal division of net family properties.  The investment must have been made recklessly or in bad faith.  That means the spouse must have known, or should have known, that the investment would become worthless. Risky investing is not enough. The spouse must have acted deliberately to lose money or known that he or she was likely to lose money.

That can definitely seem unfair - especially when one spouse is a conservative investor and one spouse is a high risk investor, or where one spouse's savings have done really well and the other spouse's investments have done poorly. But, fairness is not the test. There are many ways that Family Law operates that people think are unfair, especially with regard to money.  This podcast explains some of the bigger ways to lose money in Family Law.  Regardless of how the law works, when spouses have different opinions on financial matters, that can cause stress in, or even cause  the end of, their marriage.

Where spouses have significant differences of opinion about money, they should consider getting a marriage contract.  Spouses can get a marriage contract at any point during the marriage.  They can keep a marriage together if one spouse wants to do something risky and the other one wants financial protection.  The video below explains how to protect yourself  and save your marriage with a marriage contract.




But, if spouses are already separated because of money issues, it is likely too late for a marriage contract. Once separation occurs, things crystallize so it is difficult to fix things. The best time to see a Family Lawyer about financial problems in a marriage is before separation. The video below explains some other common family law mistakes that a family lawyer may be able to fix. 



Still, even after separation it is worth speaking to an excellent Family Law Lawyer.  It may be possible to correct an unfair financial situation  through spousal support, as section 15.2(6)(a) of the Divorce Act allows a judge to address the economic consequences of the marriage and its breakdown through spousal support.  That can be through either awarding spousal support or reducing an amount of spousal support to reflect how the marriage affected the spouses financially.   


Guide to the Basics of Ontario Family Law (book)

You can get a lot more information about Ontario Family Law issues, including support and property division and most other common family law issues by downloading this $9.99 e-book for KindleKobo, or iPad/iPhone/Mac or ordering the paperback version.  But, to keep out of trouble, it is always best to speak with a top family law lawyer


Guide to the Basics of Ontario Family Law Available on Kindle
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Availed on the iBookstore

Obviously, there can be a lot of money involved in any marriage or relationship and that means there can be a lot at stake financially.   Get the help of a lawyer immediately to avoid financial hardship.  Contact Certified Specialist in Family Law (and author of the book above), John Schuman, by emailing him, calling 416-446-5869, or using the contact form below.  We answer all inquiries promptly and we can arrange for you to come in quickly for a consultation (charged at a reduced hourly rate).


Many thousands of people get family law assistance from this website everyday.  If you have found this page useful, please share it on your social network using the Facebook, Twitter, LinkedIn and Pinterest buttons at the bottom of the page.  Please comment on this page using the comments section at the bottom to share your thoughts on money issues in divorce or separation.


Contact John Schuman



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