Can a Prenup Protect My Business From My Spouse in Ontario?

Yes, a marriage contract can keep a business out of an equalization claim. Property that the spouses agree by a domestic contract is not to be included is excluded from net family property. Without a contract, net family property is the value of all property a spouse owns on the valuation date, except excluded property, after deducting debts and other liabilities and the value of property, other than a matrimonial home, owned on the date of marriage.

To be enforceable, the contract must be in writing, signed by the parties and witnessed. A court can still set it aside on application if a party failed to disclose significant assets or significant debts or other liabilities existing when it was made, did not understand its nature or consequences, or otherwise in accordance with the law of contract. A contract clause cannot remove that power.

Whether a contract can fix a value for business shares depends on its wording, so have a lawyer and accountant review it. Under s. 4(3) of the Family Law Act, the person claiming a deduction or exclusion from net family property has the onus of proving it. Ontario's government advises that each partner speak to a different lawyer and that the partners exchange financial information before signing.