Prenup Agreement in Ontario: What Can and Cannot Be Included

Drafting a prenup means deciding what you want to agree on. Some topics are open to you, some are limited, and some clauses simply will not be enforced in Ontario.

This guide walks through what a marriage contract can include, where the limits are, and how to plan around them. It is general information and does not replace advice on your own contract.

Topics a prenup can cover

Under the Family Law Act, a marriage contract can deal with ownership in or division of property, support obligations, and any other matter in the settlement of the couple's affairs. It can also deal with the right to direct the education and moral training of the couple's children. Ontario's government adds that these contracts can cover who moves out of the home.

Property and debts

Without a contract, net family property is the value of what 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. The spouse with the lesser net family property is entitled to one-half of the difference on divorce, nullity or separation with no reasonable prospect of resuming cohabitation. However, a court may award more or less than half the difference if equalizing would be unconscionable.

A prenup can change this. Property the spouses have agreed by a domestic contract is not to be included is excluded from net family property. Some exclusions apply even without a contract, including gifts or inheritances from a third person after the date of marriage (other than a matrimonial home), damages for personal injuries, and life insurance proceeds.

Without a contract, a matrimonial home owned before marriage, or gifted or inherited, gets no date-of-marriage deduction or gift and inheritance exclusion, and Ontario's guidance says its full value must be shared unless the spouses agree otherwise. That is one reason couples address the home in a contract. The person claiming a deduction or exclusion has the onus of proving it.

On pensions, a domestic contract may provide for the immediate transfer of a lump sum out of a pension plan, and other ways of dividing a pension interest by contract are restricted.

Support

A marriage contract can deal with support obligations. The limits are real, though. A court may set aside a support provision, or a waiver of the right to support, on these grounds:

• It results in unconscionable circumstances.
• It is in favour of, or the waiver is by or for, a dependant who qualifies for an allowance for support out of public money.
• Support under the contract is in default when the application is made.

For child support, a court may disregard a provision that is unreasonable having regard to the child support guidelines. Every parent has an obligation to provide support for their child, to the extent they are capable of doing so.

Children and the matrimonial home

A prenup cannot settle decision-making responsibility or parenting time. Even on education and moral training, a court may disregard a provision if doing so is in the child's best interests.

On the home, both spouses have an equal right to possession of a matrimonial home, whoever owns it, but if only one spouse has an interest in the home, the other spouse's right of possession is personal as against the owner and ends when they stop being spouses, unless a separation agreement or court order says otherwise. A term in a marriage contract that tries to limit that right is unenforceable. A spouse also generally may not sell or mortgage an interest in a matrimonial home unless a listed condition is met, such as the other spouse's consent or a court order.

Other clauses Ontario will not enforce

A term that takes effect on separation and ends a party's rights if that party is not chaste is unenforceable. A term ending rights on marriage or cohabitation with another person is still given effect.

A clause also cannot stop a court from setting the contract aside where a party failed to disclose significant assets, or significant debts or other liabilities, that existed when the contract was made. The same is true where a party did not understand the nature or consequences of the contract.

What to do next

• List what you want to cover: property, debts, support, the home.
• Separate those topics from anything about parenting, which a prenup cannot settle.
• Disclose significant assets and debts fully.
• Each of you should speak to a different lawyer and exchange financial information.
• Put the agreement in writing, sign it and have it witnessed.

Frequently asked questions