Understanding Prenuptial Agreements in Ontario

Marriage is a significant commitment between two people that can bring about certain legal and financial obligations. In Ontario, prenuptial agreements often help two parties entering a marriage protect their interests and outline their obligations during a separation.

But what are prenuptial agreements, and how do they work? In this blog post, we’ll outline everything you need to know about prenuptial agreements in Ontario.

What is a Prenuptial Agreement?

A prenuptial agreement (often referred to as a “prenup” or a domestic or marriage contract) is a written contract entered into by a couple before they get married. It typically outlines how assets, financial responsibilities, spousal support, and children will be handled if the parties divorce or separate.

How Do Prenuptial Agreements Work?

The rules relating to prenuptial agreements are outlined in Ontario’s Family Law Act, R.S.O. 1990, c. F.3. This legislation permits people who are married to or intend to marry each other to enter into an agreement outlining their respective rights and obligations if they divorce or separate, including ownership or division of property, support obligations, the right to direct the education and moral training of their children, and other relevant matters.

Notably, the Family Law Act, R.S.O. 1990, c. F.3 explicitly prevents the parties from outlining rights to decision-making or parenting time with respect to children in a prenuptial agreement, nor can a prenuptial agreement limit one spouse’s rights relating to the matrimonial home.

Requirements for Prenuptial Agreements

Beyond the requirements outlined above, the parties must meet certain requirements in order for a prenuptial agreement to be valid:

• The parties must create a valid prenuptial agreement;
• The parties must enter into the prenuptial agreement willingly (for example, one party cannot coerce the other party into entering into the prenuptial agreement);
• The terms of the agreements must be fair and reasonable for both parties;
• The parties must provide full disclosure of their assets, liabilities, and other financial information; and
• The parties must obtain independent legal advice to ensure they understand the terms and implications of the prenuptial agreement.

Please address the requirements above to avoid a prenuptial agreement being found invalid at a later date.

Why are Prenuptial Agreements Important?

Prenuptial agreements aren’t required for married persons (or people who intend to get married). However, they can be useful for those looking to create clarity or protect their assets in the event of a separation. For example, prenuptial agreements can:

• Help individuals protect assets they acquired before the marriage;
• Outline how debts will be handled to ensure that one spouse does not become responsible for the other spouse’s debts on separation or divorce;
• Provide clarity and certainty regarding financial matters; and
• Provide a clear framework for how each party will be cared for in the event of separation or divorce.

Keep in mind that you don’t have to be engaged or newly married to create a framework for a potential separation or divorce. Postnuptial agreements—which are created after a party gets married—are equally valid tools for addressing what will happen if the parties separate or divorce and can be useful if the parties experience a change in circumstances during their marriage that needs to be addressed.

What is Covered in a Prenuptial Agreement?

Prenuptial agreements can look different for different couples. Generally, however, a prenuptial agreement will cover some or all of the following topics:

• Division of property: In other words, how the parties’ assets and properties will be divided in the event of a separation or divorce.
• Spousal Support: Whether one party will pay spousal support to another party in the event of divorce, including how much they will receive, the length they will receive it, and any conditions on spousal support.
• Debts: How any debt incurred before or during the marriage will be addressed on separation or divorce.
• Children: Specifically, do the parties have any rights to direct their children’s education or moral training? As noted above, terms relating to decision-making or parenting time for children are not enforceable in a prenuptial agreement.
• Business Interests: How business interests will be managed or divided if the parties own a business.

Considerations for Prenuptial Agreements

It’s important for parties considering a prenuptial agreement also to consider the impact and limitations of prenuptial agreements, as follows:

• The emotional impact of prenuptial agreements: Discussing a prenuptial agreement with your spouse can be emotionally challenging. If you believe that one is appropriate for your situation, be sure to approach the conversation and planning process with communication and understanding.
• The limitations of prenuptial agreements: Even if the parties have created a prenuptial agreement, it doesn’t mean that the agreement will hold up in court. Courts often set aside agreements that are unfair in the circumstances. Consider, too, that prenuptial agreements cannot address important aspects of separation and divorce, such as decision-making and parenting time for children. It’s important to consult an experienced family law lawyer when drafting a prenuptial agreement to ensure the agreement will be enforceable and to understand your rights relating to topics that cannot be addressed in a prenuptial agreement.
• The importance of independent legal advice: Seeking independent legal advice is critical for both parties to ensure they understand how a prenuptial agreement might impact their individual rights in the event of a divorce or separation.
• Review your prenuptial agreement regularly: Family circumstances can change over time, which is why reviewing your prenuptial agreement on a regular basis is a wise idea. Taking the time to review the prenuptial agreement annually can help you identify any changes you might need to make to the agreement to ensure it reflects your needs in the event of a separation or divorce.
• Prenuptial agreements aren’t for everyone. Remember: Not every married couple needs a prenuptial agreement to protect their interests in the event of separation or divorce. Many couples choose not to create a prenuptial agreement for many reasons. To determine whether a prenuptial agreement is right for you, it’s best to speak with an experienced family law lawyer for advice.

Experienced Windsor Family Law Lawyers Serving Windsor-Essex County

Determining whether a prenuptial agreement is right for you can be complicated and emotionally charged. At Johnson Miller Family Lawyers, our experienced family law lawyers are passionate about helping clients understand their rights, obligations, and options, empowering them to make the right decisions for their families.

Our team provides honest and practical advice to help clients preserve their rights and interests while avoiding unnecessary and costly conflict. To learn more, call us at 519-973-1500 or contact us online for a free consultation.