What Is a Marriage Contract? How It Works in Ontario

If someone has mentioned a "marriage contract" or a "prenup", you may wonder whether it is necessary, unromantic or even enforceable. In Ontario it is a recognized legal document, and it is a more ordinary part of planning a life together than many people expect.

This article explains in plain words what a marriage contract is, who can make one, and how it changes what happens to property and support if a relationship ends. It is general information, not advice on your own situation.

What a marriage contract is

A marriage contract is a written agreement in which two people set out their rights and obligations as spouses. Ontario's Family Law Act lists it as one kind of "domestic contract", alongside separation agreements, cohabitation agreements, paternity agreements and family arbitration agreements.

People often say "prenup" or "prenuptial agreement". Those are informal names that the Act does not use, and Ontario's government describes a marriage contract as a document couples sign before marrying. In it, the two people can agree on their rights and obligations during the marriage, on separation, on annulment or dissolution of the marriage, or on death.

Who can make one

Two people who are married to each other, or who intend to marry, may make a marriage contract. It is not limited to the time before a wedding, because people who are already married may also make one.

• Unmarried partners can set their property rights in a cohabitation agreement, because Ontario's property-division rules do not require unmarried couples to split property acquired while living together.
• If the parties to a cohabitation agreement later marry each other, the agreement is deemed to be a marriage contract.
• A minor can enter into a domestic contract only with the court's approval.
• For a mentally incapable person, a guardian of property or an attorney under a continuing power of attorney for property may enter into the contract. In other cases of mental incapacity, the Public Guardian and Trustee has power to act.

What it does to property

Without a contract, married couples follow the default rules. 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. 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 negative result is treated as zero.

A marriage contract lets you change that. Property the spouses have agreed by domestic contract is not to be included is excluded from net family property. A marriage contract may deal with ownership or division of property and any other matter in the settlement of the couple's affairs.

This can matter a great deal for a home. Without a contract, no date-of-marriage deduction or gift or inheritance exclusion applies to the matrimonial home, and its full value must be shared unless the spouses agree otherwise.

Support, death and the limits of a contract

A marriage contract may also deal with support obligations and with rights on death. On death, a surviving spouse must otherwise choose between taking under the will and receiving the equalization entitlement.

There are firm limits. A contract cannot say who will have decision-making responsibility or parenting time. Any term that tries to limit a spouse's rights under Part II of the Act, which includes the equal right to possession of the matrimonial home, is unenforceable. A court may set aside a support term or a support waiver where it results in unconscionable circumstances, where a dependant qualifies for support out of public money, or where support under the contract is in default.

What to do next

A contract is only as reliable as the way it was made. Once it is signed, the couple must follow it, but a court may set it aside on application if a party failed to disclose significant assets or debts, did not understand its nature or consequences, or on other contract-law grounds.

• Put it in writing, have both people sign it, and have the signatures witnessed, because otherwise it is unenforceable.
• Exchange financial information before signing, and consider each speaking to a different lawyer, as Ontario's government advises.
• List your significant assets and debts honestly, since failing to disclose them is a ground to set a contract aside.
• Do not sign anything you do not understand; ask questions first.
• Keep a signed copy somewhere safe and review it if your circumstances change.

Frequently asked questions