Prenup for a Second Marriage in Ontario: Protecting Your Children

If you are remarrying and have children from an earlier relationship, you may worry about what happens to your assets and your children's future inheritance. Without a contract, Ontario's default rules apply, and they were not designed with a blended family in mind.

A marriage contract, often called a prenup, is one tool to deal with this. This article explains what it can do, where the law limits it, and what to think about before you sign. It is general information, not legal advice.

What a marriage contract is

The Family Law Act uses the term marriage contract. Prenup and prenuptial agreement are informal names that the Act does not use. It is one kind of domestic contract.

Two people who are married to each other or intend to marry may make one, and it can cover their rights and obligations during the marriage, on separation, annulment or dissolution, or on death. It is not limited to the time before the wedding, so couples who are already married may also make one.

What it can do for your children's side of the family

Without a contract, each spouse's net family property is the value of what they own on the valuation date, less debts and less 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.

A marriage contract can deal with ownership and division of property, support, and any other matter in settling the couple's affairs. Property the spouses agree by a domestic contract is not to be included is excluded from net family property.

• Gifts and inheritances from a third person after the marriage, damages for personal injuries and life insurance proceeds are already excluded without a contract, with the gift and inheritance exclusion not applying to a matrimonial home.
• The person claiming a deduction or exclusion has the onus of proving it.
• A contract can set rights on death, which matters because a surviving spouse must otherwise choose between taking under the will and the equalization entitlement.

What a marriage contract cannot do

The matrimonial home matters in blended families. A contract cannot take away your spouse's equal right to possess the home, which exists whoever owns it. That right works differently if only one spouse has an interest in the home. In that case the other spouse's right is personal against the owner and ends when they stop being spouses, unless a separation agreement or court order says otherwise.

A contract can address how the home is treated in the property calculation. Without a contract, a home you owned before marriage, or received as a gift or inheritance, 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.

Making it hold up

A domestic contract is unenforceable unless it is in writing, signed by the parties and witnessed. A court may set it aside on application if a party failed to disclose significant assets or significant debts or other liabilities, if a party did not understand its nature or consequences, or otherwise under the law of contract. A clause cannot remove that power.

Independent legal advice is not one of the formal requirements. Still, Ontario's government advises that each partner speak to a different lawyer and that you exchange financial information before signing. Pressure to sign close to the wedding is argued under general contract law and decided case by case, so it is worth allowing plenty of time.

What to do next

• List your assets, debts and any expected gifts or inheritances, and share them with your partner.
• Decide what you want to protect for your children, and whether a will, beneficiary designations or trusts should work alongside the contract.
• Each of you should speak to a different lawyer before signing.
• Sign in writing in front of a witness, who also signs.
• Review the contract and your will if your circumstances change.

Frequently asked questions