Prenuptial Agreement in Ontario: What You Need to Know Before Marriage

Marriage is a commitment that blends both emotional and financial aspects of life. While most couples enter marriage with long-term intentions, legal and financial planning is just as important as personal compatibility. In Ontario, prenuptial agreements-also known as marriage contracts-help couples define financial expectations, protect assets, and prevent potential disputes should the relationship end.

Although divorce rates in Canada have declined in recent years, the need for financial security remains. According to Statistics Canada, Ontario experienced a 36% drop in divorces in 2020, a figure influenced by pandemic-related court delays rather than a fundamental shift in marital stability. A well-structured prenuptial agreement ensures that both partners have legal clarity, financial protection, and a plan in place-no matter what the future holds.

Key Takeaways

• A prenuptial agreement helps couples outline financial rights, asset division, and spousal support, reducing conflict in the event of separation or divorce.
• Despite declining divorce rates, legal experts suggest that external factors, such as court delays, have influenced these numbers, rather than a reduced likelihood of marital breakdown.
• Prenups in Ontario can cover key issues such as property division, spousal support, and debt responsibility but cannot override child custody or matrimonial home rights.
• Common-law couples can opt for a cohabitation agreement, which functions similarly to a prenup and can transition into a marriage contract if they later marry.
• Consulting a family lawyer in Ontario ensures the prenup is legally enforceable under the Family Law Act, protecting both parties’ rights.

Before entering into marriage, partners should set the legal terms of the relationship and specify their rights and responsibilities. This is where prenuptial agreements come into play.

What Is a Prenuptial Agreement in Canada?

A prenuptial agreement is a domestic contract signed by spouses before their wedding. In the event of a divorce, it serves as a roadmap for settling the couple’s affairs, with a particular focus on financial matters and asset distribution. By clearly outlining the division of assets and responsibilities, this agreement helps prevent future conflict.

How Does a Prenup Protect You in Divorce?

What happens if you sign a prenup and later get divorced? The agreement offers significant protection for both spouses, especially in terms of financial interests and asset division. It ensures that any potential financial consequences are minimized, providing clarity and reducing the risk of unexpected outcomes when the marriage ends.

Why Are Prenuptial Agreements Becoming More Common in Canada?

Despite declining divorce rates, protecting your legal rights from the onset with marriage contract lawyers is a good idea. There are many reasons why couples in provinces like Alberta, British Columbia, and Ontario choose to sign a prenuptial agreement.

For example, an online prenup agreement in Ontario offers a convenient way to formalize your legal relationship with your future spouse. Learn more about how it works and what to consider before entering a prenuptial agreement in Ontario.

Key Takeaways ⚬ There are numerous reasons why a marriage ends in divorce. But significant financial problems and disagreements are on top of the list. ⚬ With a prenuptial agreement, spouses can help prevent future over money, property and other assets in a divorce. ⚬ Prenups can be powerful tools to start a successful long-term marriage if discussed and crafted correctly.

Prenuptial Agreement vs. Marriage Contract

In Canada, prenuptial agreements are more commonly known as “domestic contracts” or “marriage contracts”. Under Section 52 of Ontario’s Family Law Act, a marriage contract is a voluntary agreement between two individuals. The parties may be planning to marry or are already married to each other. 

Spouses most often enter into this type of written agreement before marriage. When they sign a marriage contract prior to their marriage, it is commonly referred to as a prenuptial or prenup agreement.

How Does a Prenup work?

A prenuptial agreement clearly specifies how certain rights, obligations, and other matters will be addressed in the event of separation, divorce, or death. This includes the division of assets, spousal support, and other crucial financial terms, providing clear expectations and legal clarity for both parties.

Postnuptial Agreements

Alternatively, spouses can form a similar agreement after getting married, known as a postnuptial agreement in Ontario. While postnuptial agreements serve the same purposes as prenups, they differ because it’s more complicated to separate marital from non-marital assets after marriage. Courts scrutinize postnups more thoroughly, which can make them harder to enforce.

Cohabitation Agreements

For couples in common-law relationships, cohabitation agreements serve a similar purpose. In Canada, common-law partners are defined as two individuals who have lived together continuously for at least one year. A cohabitation agreement helps these couples establish guidelines for potential separation. If the couple marries later, the cohabitation agreement will transition into a marriage contract.

If a common-law partner refuses to sign a cohabitation agreement, it can create legal and financial uncertainties in the event of a separation. Understanding your options and legal rights is essential to protect your interests. Learn more about what to do if your spouse won’t sign a separation agreement and how to navigate this situation effectively.

Why Should You Sign a Prenuptial Agreement?

Married couples may face numerous disagreements, but financial concerns are among the most common ones. Partners have different beliefs about money, causing conflicts over financial decisions. 

Additionally, one person may be holding more significant assets or debts than the other before marriage. With a prenuptial agreement, each spouse can have more financial security. The domestic contract also prepares couples and saves them emotional and financial stress when the marriage ends. 

Divorce and separation are likely not on your mind when getting married. Prenuptial agreements are not the most romantic subject to discuss with your future spouse, but there’s nothing wrong with wanting to protect yourself. Signing a prenup provides clear guidelines for asset division and financial responsibilities, which can greatly simplify and expedite the divorce process. Below are additional benefits of prenups:

Protect Personal and Business Assets

Many couples already own personal and business assets when they get married. They may include family businesses, heirlooms, inheritances, retirement funds, and investment accounts. Assets owned before marriage are premarital property. 

Your fundamental rights over your premarital assets don’t change even if you enter marriage. They’re not automatically subject to distribution in the event of a divorce. However, if you’re not careful, premarital assets can turn into marital property.

That usually happens when one spouse uses the premarital property to make investments or pay off debts during the marriage. Unless you have a well-drafted prenuptial agreement, this can put your personal and business assets at risk in a divorce. 

Signing a prenup agreement provides legal protection over assets you acquired before marriage. It establishes the rights and obligations of each spouse regarding separate and marital assets. You can specify what assets you want to keep and protect when the marriage ends in your prenup.  

Address Liabilities or Debt Obligations

Along with accumulated assets, partners may bring massive debt into the marriage. They might be paying credit card debts, student loans, or child support. Perhaps, they’re starting a new business or simply losing control of their spending. 

If you’re the less-burdened partner, you probably don’t want to have to pay off creditors. You can use a prenuptial agreement to address any debt obligations you and your future spouse incurred before or during the marriage. 

With a prenup, you can define the premarital debt of each partner as separate and specify how they will be resolved. This will help limit one spouse’s exposure to the other’s debt in the event of divorce. 

Settle Potential Alimony Challenges

Alimony payments are designed to fix financial issues. But they can also lead to bigger problems when inadequately addressed in the prenup. 

When one spouse earns significantly more than the other, the amount of financial support payable can be surprisingly high for most individuals.

With a prenup, married couples can stipulate a specific alimony amount or even waive it. Prenuptial agreement adds structure to alimony. It eliminates the need to ask a judge to settle potential alimony issues when the marriage ends. 

Besides waiving the right to receive maintenance or specifying a certain amount, the parties may also place conditions in the prenup. For example, the prenuptial agreement may terminate the right to alimony if a spouse commits infidelity.

Secures Children in the Process

A prenuptial agreement is also beneficial, particularly when you have children from a previous relationship. 

You can include specific provisions in the prenup that will protect children during the marriage and in the event of divorce. There may be particular assets that you want to preserve for children from your first marriage. 

Without a prenup, the surviving spouse may assume most of them, leaving less than what you wish your children to have. A prenuptial agreement can ensure that they will inherit all or a portion of your assets.

What Is Included in a Prenup Agreement in Ontario?

A prenup in Canada is a legal document that outlines an agreement between a married couple concerning their rights and obligations. But what issues or provisions go into a prenuptial agreement? A prenup can protect almost anything of value.

Working with a prenuptial agreement attorney in Toronto and other cities across the region is an excellent step. It ensures that all essential matters are discussed and documented in compliance with Ontario’s Family Law Act. When drafting a prenuptial agreement, you and your future spouse can include stipulations such as:

Ownership or Divisions of Property

One of the issues married couples deal with in divorce or separation is determining how to divide their assets. Division of property can be complex, but a family lawyer can help you explore your options. 

Without a marriage contract or prenuptial agreement, their property will generally be allocated based on the laws of Ontario. Married couples are automatically entitled to an equalization of net family property or equal rights of the profits of their marriage. The end of a marriage or the death of a spouse sets off the right to equalization.

That means if you don’t have a prenup, you must split all property acquired during the marriage equally. The reason for divorce does not matter. The same applies to the increase in value of any property spouses owned before getting married. 

The good news is that each spouse could protect significant assets they brought into or earned separately during the marriage. Through a prenuptial agreement, married couples can decide the handling of their property.

Spousal Support Obligations

A non-earning spouse may seek spousal support to live independently in the event of divorce. A court will typically examine numerous factors when awarding spousal support to the potential receiving spouse. 

Some people hesitate to sign a prenup because they believe its primary purpose is to avoid alimony. But without a prenuptial agreement, spouses will only rely on default state laws when their marriage ends. In most cases, this can lead to a long and frustrating court battle. 

Having a prenup allows married couples to choose the terms for spousal support obligations freely. They can agree on a predefined alimony amount and what conditions to seek spousal support when separating or to break up. 

Contrary to what others believe, a prenuptial agreement can help guarantee the right to spousal sport in the event of divorce. This will give married couples more peace of mind as they enter the marriage. 

Provisions for Children’s Education and Moral Guidance

Prenups in Ontario, Canada, offer protection not only for both spouses but also for your children. If you or your spouse do not yet have children, you can include specific provisions for future children in the prenuptial agreement.

Specifically, a prenuptial agreement allows married couples to plan how any existing or future children will be brought up morally and educationally. You and your spouse can agree on the following specifications in your prenup. 

• Specific schools and subjects will your children study
• Values, beliefs, cultural practices or religion
• The amount you plan to contribute to your children’s education funds

Other Matters in the Settlement of Spousal Affairs

A prenuptial agreement can also cover expectations concerning your marital responsibilities. Note that you may not include non-financial duties like who will be responsible for taking out the trash every week. But you can have the following specifications in your prenup: 

• Who will pay the bills and file tax returns
• How your joint and personal bank accounts will be handled
• How to obtain credit or spend money
• Who will be a stay-at-home parent when you have children

What Cannot Be Included in a Prenuptial Agreement?

A premarital agreement can protect almost anything the spouses agreed upon, as long as the law does not prohibit it. Like other provinces, Ontario prenups have limitations on what spouses can include in the document.

The Family Law Act does not allow the following issues in a marriage contract or prenup in Canada.

Child Custody or Access

A prenuptial agreement cannot cover most parenting issues, particularly child custody or access decisions. This is because the legal test for custodial arrangements centres on the best interests of the child during the breakup. 

The court always retains the power to decide what’s in the child’s best interest. It may disregard any provision of the marriage contract relating to child custody or access.

Rights to the Matrimonial Home

Section 17 of the Family Law Act governs the rights of married couples to matrimonial home. But as per Section 52.2, any provision in a prenuptial agreement cannot affect the equal rights of each spouse to live and possess the matrimonial home. This also includes the right to share in the home’s value. 

Married couples will retain equal rights to remain in the home even if the property is under one spouse’s name. Unless there’s a court order or separation agreement, they cannot prevent the other partner from entering the matrimonial home. 

Provisions Considered Anything Illegal or Immoral

No province or territory in Canada allows illegal or immoral provisions in your prenuptial agreement. This means your prenup cannot override or invalidate any statutes. They should not include anything that requires you or your spouse to commit illegal actions.

The court will reject any such provisions outright, which may result in the prenup document or a portion of it being set aside. To prevent this from happening, get the help of a family lawyer when drafting your prenuptial agreement. This will ensure that all the contract terms comply with statutes at all levels.

What is the Process of Drafting a Prenup Agreement?

The process of drafting a prenuptial agreement requires transparency, careful thought, and legal guidance. Here’s a breakdown of how to approach the drafting of a prenup in Ontario to ensure it’s clear, fair, and enforceable.

1. Initial Discussions

Start with an open conversation about finances, assets, liabilities, and expectations for the future. Discuss critical issues like property division, spousal support, and potential inheritance. This is the foundation of the prenup.

2. Consult a Prenuptial Agreement Lawyer

While drafting your prenup yourself is possible, it’s highly advisable to consult a family lawyer. Both parties must seek independent legal advice (ILA) to make the agreement enforceable and fair. Your lawyer will help you understand the terms and consequences of a prenup based on your circumstances.

4. Drafting the Agreement

The lawyer will draft the agreement based on your discussions, covering key provisions like:

• Property division in case of divorce
• Spousal support terms
• Debt allocation and responsibility
• Inheritance provisions

5. Review, Revision, and Signing

Once your lawyer drafts the agreement, both parties should have time to review it thoroughly. Make sure every clause makes sense and reflects what was agreed upon. If something feels unclear or unfair, ask for revisions.

After finalizing the agreement, both parties must sign it voluntarily. Ensure you sign well in advance of the wedding (preferably 30 days before) to avoid claims of undue pressure. Both parties must also have independent legal advice at this stage to validate the agreement.

8. Amendments and Updates Over Time

Life circumstances change, and so may the terms of your prenuptial agreement. You may want to amend your prenup after major life events such as:

• The birth of a child
• Significant changes in income, assets, or debts
• Purchasing a home or business together

Myths and Facts About Prenuptial Agreements

There are numerous misconceptions surrounding prenuptial agreements. Because it is often an uncomfortable subject for many couples, many tend to avoid bringing it up. Some may be hesitant to sign this agreement because of its negative connotations. 

However, it is essential to be informed and understand what a marriage contract or prenup can do for you. Do you have doubts about entering into a prenuptial agreement in Ontario before marriage? 

Below are some myths you and your future spouse should know about a prenup and the facts. 

Myth 1: Prenuptial agreements are only for wealthy people

The prevalent idea is that only wealthy people should have a prenuptial agreement. Although prenups deal with financial issues, it doesn’t mean that only the rich and famous can benefit from them. 

Couples should get into a prenup, regardless of income level. You and your spouse may have a low income when you get married but may acquire wealth over time. 

A prenuptial agreement is an excellent way to protect your current and future earning potential when the marriage ends. The agreement will specify the allotment of any assets and financial interests you acquire during the marriage.

A well-drafted prenuptial agreement can also help streamline the separation process by outlining financial arrangements in advance. If separation becomes necessary, having a legally sound agreement in place can reduce conflicts and simplify asset division. Learn more about how a separation agreement can provide additional protection and clarity for both spouses.

Myth 2: Prenups signal a lack of trust in the relationship

Many believe that prenuptial agreements indicate a lack of trust or confidence in the relationship and their partners. Because of this belief, couples tend to avoid discussing their assets and financial interests before marriage.

But not discussing these crucial issues before marriage is a mistake. It can eventually cause massive conflict during and after the marriage. Meanwhile, arranging for a prenup and having an honest discussion about each other’s finances can build trust and peace of mind. 

Myth 3: Prenups are only relevant in case of divorce

Most prenups stipulate what will happen to your assets and debts if you get a divorce. But it’s worth noting that prenups don’t only prepare each spouse for divorce or separation. 

It also provides legal protection in case of incapacity or death. You can include provisions on the disposition of your assets if one partner dies or becomes incapacitated. Spouses can set out their wishes for their assets and finances, which is helpful in estate planning.

Additionally, married couples can use prenups to determine their financial expectations during the marriage. They can agree on how they will spend their earnings through the relationship. This will help create transparency for a successful marriage. 

How and when can a prenup be set aside in Ontario? 

Section 56.4 of the Family Law Act permits a court to disregard a prenuptial agreement in part or whole under specific conditions. Get legal advice when creating the contract to ensure your prenup is valid and enforceable.

Below are the grounds that a marriage contract can be set aside in Ontario, Canada. 

Failure to disclose significant assets and debts

Full financial disclosure of significant assets and debts is crucial when entering a prenuptial agreement. When contracting, each spouse must properly show a list of their assets, obligations and other liabilities.

Failure to make financial disclosure opens the door to allow the court to set aside your marriage contract. Note that a judge will consider whether both parties have been informed of all assets and liabilities.

Ensure not to leave anything in your financial schedule or risk putting yourself in a vulnerable position. Suppose the judge decides to disregard your entire prenuptial agreement. In that case, the assets that should be under protection may suddenly be up for debate.

One of the parties doesn’t understand the agreement

Both spouses must comprehend the implications and consequences of the prenuptial agreement. If one of the parties doesn’t understand what they’re going into, the court may set the contract aside.

It would help to sign the prenup in advance. This will signify that both parties had enough time to thoroughly grasp the terms and ramifications of the agreement. A lawyer can argue undue influence if the domestic contract is signed hours before the marriage.

Does not comply with the law of contract

Every aspect of the prenuptial agreement must consider fairness and comply with contract law. If the judge finds one unfair provision, they may be more likely to set aside the contract or the specific term. It’s crucial to seek experienced legal advice to review your prenuptial agreement. 

If you believe your prenup must be void, you should ask an appropriate court to set the contract aside. But note that courts will only get involved if one of the grounds mentioned above is present.

Did you know? A whopping 40% of marriages end in divorce, but only 8% of Canadian couples signed a prenuptial agreement before getting married.

Protecting Your Future with a Prenuptial Agreement

A prenuptial agreement isn’t about planning for divorce-it’s about establishing financial clarity and ensuring both spouses feel secure in their marriage. Whether protecting personal assets, setting expectations for spousal support, or avoiding financial disputes, a well-structured prenup can provide peace of mind.

At Nussbaum Law, we help couples create fair, enforceable agreements that comply with Ontario’s Family Law Act and protect your best interests.

Ready to discuss your prenup? Schedule a free consultation with our experienced family lawyers today.