Marriage Contract vs Prenup: Is There a Difference in Ontario?

If you are searching online, you will see prenup, prenuptial agreement, premarital agreement and marriage contract used almost interchangeably. It is fair to wonder whether they are different documents with different rules.

In Ontario, the short answer is that the law has one name for this document. This article explains what that name is, how it fits with other family agreements, and why the label you use matters less than what the document says and how it is signed.

What Ontario law actually calls it

The Family Law Act uses the term marriage contract in section 52. Prenup and prenuptial agreement are informal names, and the Act does not use them. Ontario's government describes a marriage contract as a document couples sign before marrying.

So when someone says they want a prenup in Ontario, the legal document they are describing is a marriage contract.

A marriage contract may deal with ownership or division of property, support obligations, and any other matter in the settlement of the couple's affairs. It may also deal with the right to direct the education and moral training of the couple's children, but it may not deal with decision-making responsibility or parenting time.

A marriage contract is a type of domestic contract

The Act groups several agreements under the heading domestic contract. A domestic contract means a marriage contract, separation agreement, cohabitation agreement, paternity agreement or family arbitration agreement.

If the parties to a cohabitation agreement later marry each other, the agreement is deemed to be a marriage contract.

Why the word prenup can be misleading

The word prenup suggests the document must be signed before the wedding. The Act is wider. Two people who are married to each other or intend to marry may make a marriage contract. A couple who are already married can make one too.

In practice, this means a married couple who never signed anything before the wedding are not shut out. They can still put an agreement in place, as long as it meets the formal rules.

The same rules apply whatever you call it

Calling a document a prenup does not give it extra force, and calling it a marriage contract does not make it weaker. What matters is whether it meets the Act's requirements. It must be in writing, signed by the parties and witnessed, or it is unenforceable.

A court can also set it aside, in whole or in part, if a party failed to disclose significant assets or debts, did not understand its nature or consequences, or on other contract law grounds. A contract clause cannot remove that power.

Where a domestic contract deals with a matter that the Family Law Act also deals with, the contract prevails unless the Act provides otherwise. That is why couples use these documents: for example, to agree that certain property is not included in the equalization calculation.

Some limits apply to what a contract can achieve, whatever it is called:

• A term that tries to limit a spouse's rights under Part II (Matrimonial Home), which includes the equal right to possession of the home, is unenforceable.
• A court may disregard a provision about a child's education, moral training, decision-making responsibility or parenting time if doing so is in the child's best interests.
• A court may disregard a child support provision if it is unreasonable having regard to the child support guidelines.
• A court may set aside a support provision or a waiver of support if it results in unconscionable circumstances.

What it replaces, if you sign nothing

Without a contract, the default rules apply. Net family property is generally the value of what a spouse owns on the valuation date, with exclusions, after deducting debts and the value of property owned on the date of marriage, other than a matrimonial home. On divorce, nullity, or separation with no reasonable prospect of resuming cohabitation, the spouse with the lesser net family property is entitled to one-half of the difference.

There is a special rule for a matrimonial home. Without a contract, no date-of-marriage deduction or gift or inheritance exclusion applies to it, and Ontario's guidance says its full value must be shared unless the spouses agree otherwise.

A marriage contract is one way to change that outcome by agreement. Whether it makes sense for you depends on your finances and goals, and a lawyer can help you weigh that.

What to do next

• Use the term marriage contract when you speak with a lawyer, even if you think of it as a prenup.
• Decide whether a marriage contract or a cohabitation agreement fits your relationship.
• Make sure the document will be written, signed and witnessed.
• Each partner should speak to a different lawyer and exchange financial information first.

Frequently asked questions