Prenuptial Agreement Ontario – What You Should Know Before You Sign the Agreement

Prenuptial agreements, commonly referred to as “prenup,” outline how your assets will fare if you divorce or separate from your spouse. A prenuptial agreement may dampen the bliss that often precedes new relationships and weddings. However, experts are in favour of signing a prenuptial agreement. A prenup is not a prediction that a marriage will not last, as some people assume. Instead, a prenup helps limit the acrimony and the uncertainty that characterize separations and divorces. Since prenups are legally binding, couples must take them seriously. Proper preparation of a prenup is necessary for it to be legally binding. Below is what you should know about prenuptial agreements in Ontario:

Domestic Agreements 

Under Ontario family law, prenups are known as domestic agreements, but both terms are used interchangeably across Canada. Depending on the union, a domestic contract may be either a cohabitation agreement or a marriage contract. A domestic contract may be written between two people who intend to cohabitate or marry. The agreement is also common among married people or people in common-law unions. If people in a common-law union get legally married, the cohabitation agreement becomes a marriage contract. Prenups protect the party’s assets in case of a breakup and set forth the rules that govern the couple’s union at death or divorce.  

Issues Covered Under Domestic Contracts 

Domestic contracts may include provisions of all types of eventualities except those that violate the law. The typical issues included in a domestic contract are:

• Either party’s roles and responsibilities during the union 

• The ownership and division of property after a divorce or death 

• Spousal support obligations and the applicable duration 

• How inheritances received during the marriage will be treated 

• The division of each party’s life insurance policies, retirement accounts, and pensions 

• Who will direct the moral training and the education of the children in the union 

• Provision of the surviving spouse in case one spouse dies 

Prohibited Issues in Domestic Contracts 

A domestic contract does not outline child custody matters, child support obligations, and visitation rights. This arrangement depends on what is in the child’s best interest at the time of the breakup. The contract does not include provisions that grant more than half the pension to one spouse after divorce. Clauses that prevent a spouse from receiving support after cohabitation or remarriage with a new partner are illegal. 

The Matrimonial Home 

A matrimonial home is a home used by the spouses and their children as a residence; it may include the primary residence or a vacation home. The rights regarding matrimonial homes supersede the provisions in domestic contracts. The Family Law Act governs the spouses’ rights regarding the matrimonial home. According to the Family Law Act, both spouses have equal rights to possess and live in the matrimonial home regardless of who owns it. However, without the other party’s consent, a spouse cannot sell, borrow against, or mortgage the marital home. 

Court Can Set Aside Domestic Agreements 

The court may set aside a domestic contract if:

• Either spouse fails to disclose details like debts, assets, liabilities, and other relevant information

• One party is constrained into signing the contract

• The agreement is not in line with the law of the contract

• The contract provisions are unconscionable

A marriage contract is only valid if both parties and a witness sign it. If one party remarries, his or her will is revoked automatically. If you are considering drafting a prenup or signing one, a divorce lawyer Toronto will guide you through the process.