Planning a wedding in Ontario? Don’t forget the most important wedding to-do list: getting a prenuptial agreement (known as a marriage contract). And you’re not alone! 61% of Canadians agree that getting a prenup is a good idea. A prenuptial agreement offers invaluable peace of mind and can save you from potential headaches down the road. This comprehensive guide will walk you through everything you need to know about prenuptial agreements in Ontario, from the legal requirements to common clauses and the enforcement process. Let’s dive in!
What is a prenup?
A prenup is a contract between two future spouses who are planning to get married. It helps work out various aspects of their marriage and potential separation if things go wrong. Prenups must follow the laws of your province in order to be valid and enforceable. What’s required in Ontario may not be required in other provinces. Prenups typically deal with aspects of property and spousal support but may not handle child matters such as support and/or custody.
Why get a prenup?
Getting a prenuptial agreement in Ontario helps ensure that your assets are distributed the way you want them to be distributed. For instance, in Ontario, the law says that upon divorce, there generally must be an equalization payment that balances out the growth in wealth of each party during the marriage (R.S.O. 1990, c. F.3, s. 5 (1)). The assets you come into the marriage with are excluded, but any increase in their value or any new assets are shared. There are also certain rules when it comes to the matrimonial home. With a prenup, you can override the law and ensure neither party is required to pay the other equalization and you can protect the equity in your home.
In addition, you may also prevent payments for spousal support by including a waiver that states neither party will be required to financially support the other during or after a divorce.
Some other benefits of a prenup include:
- Peace of mind that your assets are protected
- A streamlined divorce process with pre-determined property issues
- Total alignment with your spouse on certain issues such as property ownership
- Financial transparency between spouses through financial disclosure
- The opportunity to discuss future goals, both lifestyle and financial
Who should consider a prenup?
While we may be biased, we think everyone should at least consider getting a prenup. However, there are some people who may be especially interested in getting a prenup:
- People with assets they want to protect
- People who want to protect against the debt from their partner
- People who may want more financial protection than what is provided by law
- People with children from previous marriages who may want to ensure all of their assets go to their kids and not a second spouse in death and/or divorce
- People are marrying for a second (or third) time
- People who want to protect their pets in a divorce
- People with businesses or may start a business in the future
- People who may receive or inherit family wealth in the future
People often mistakenly believe that only the wealthy require a prenup, but that’s not true. Anyone can benefit from a prenup, even if they don’t have money yet.
Costs of a prenup in Ontario
Prenups can cost anywhere from $5,000 to $10,000 in Ontario. The cost varies depending on the COL in your city, the rate of the lawyer you hire, the complexity of your situation, the amount of negotiation that takes place, and the amount of questions you have. The hourly rate of a lawyer in Ontario is generally somewhere between $300-$600 per hour. The lawyer will then charge for the amount of time it takes to complete your prenup from start to finish.
Legal requirements for a prenup
Now, let’s get into what makes a prenuptial agreement in Ontario valid and enforceable. According to Family Law Act, Part IV, Sections 51-54, here is what you need to do:
- Put the agreement in writing
- Make sure it is signed by both parties
- It must be witnessed by one person who is not a contract to the parties
- Make sure to include full and accurate financial disclosure
Note: Hiring a lawyer for your Ontario prenup is not a strict requirement, but it is encouraged as the absence of independent legal advice can be grounds for setting aside the agreement.
Common clauses to utilize
Now that you know what you need to do to execute the prenup properly, what can you put into it? Here are some of the clauses that you may consider including in your Ontario prenuptial agreement:
- Spousal support
- Property division
- Real estate
- Businesses
- Inheritances and trusts
- Lump sum clauses (lump sum payment from one spouse to the other upon divorce)
- Gifts
- Engagement rings/wedding rings
- Life insurance (requirement to have life insurance)
- Joint bank accounts/budgets while married
- Primary residence clause (Who stays in the marital home during divorce, though they are not enforceable but are a good framework to set for the couple)
- Death clause (waiving spousal right to inherit in case of death, requiring a will, pointing to a will)
- Confidentiality (no sharing private info, even in divorce)
- Pets (financial responsibility and ownership in divorce)
- Social media (no posting disparaging content)
One thing to keep in mind is that there are some topics that are completely off limits and that includes child matters, such as access to children, child custody and child support. In addition, marital conduct clauses such as “no-cheating” clauses are also a no-go.
Enforcing a prenup in a divorce
You may be wondering what the process looks like should you ever divorce and have a prenup. Here’s what to expect: The prenup is included in the divorce process as soon as the couple separates. Depending on the terms of the prenup, it may be as simple as being converted into a separation agreement that the parties sign. If the prenup does not include all terms of the separation, then the parties complete financial disclosure, and as part of the disclosure, the prenup provides additional exclusions for property not divided. The parties will then negotiate the remaining terms (e.g., support or parenting) but the property piece will have already been completed as per the prenup. In all cases, a properly drafted prenup will make your divorce negotiations significantly easier, faster and cost effective.
The bottom line on prenups in Ontario
Prenups can be incredibly useful for so many people, regardless of how much money you make or have. They can do more than protect assets, they can also protect pets, children from previous relationships, and ensure you and your future spouse are on the same page. The legal requirements are super simple–put it in writing, sign it, have it witnessed, and share your finances with your partner. And if the worst happens, you’ll be prepared to streamline your divorce and make your life that much easier.
Anna-Marie Musson is a Family Lawyer with over 20 years’ experience. A graduate of Windsor Law, Anna-Marie began practising in 2003. She was a partner at a prominent national Bay Street law firm before starting her own firm. Anna-Marie helps professionals and high net worth clients navigate the financial, emotional, and legal issues in divorce and separation. She also helps clients preserve their net worth and avoid financial ruin with Marriage Contracts (Pre-nups) and Cohabitation Agreements. Anna-Marie is the host of the Modern Divorce Show on 105.9 The Region and also hosts the upcoming Podcast – Love & Wealth.
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