A prenuptial agreement can help couples clarify their financial rights and responsibilities before marriage. However, simply signing an agreement does not guarantee that every term will be enforceable if the relationship later ends.
In Ontario, what is commonly called a prenuptial agreement or prenup is generally referred to as a marriage contract under the Family Law Act. Couples can use a marriage contract to address matters including ownership and division of property and spousal support obligations.
Problems can arise when an agreement is rushed, important financial information is omitted, one partner does not understand what they are signing, or the couple tries to include terms Ontario law does not permit.
Understanding these common mistakes before creating a prenup can help both partners approach the process more carefully.
Key Takeaways About Prenuptial Agreement Pitfalls in Ontario
- In Ontario, a prenuptial agreement is generally created as a marriage contract under the Family Law Act.
- A marriage contract must be in writing, signed by both parties and witnessed to satisfy Ontario’s statutory formalities.
- Failing to disclose significant assets or debts can create grounds for a court to set aside a domestic contract.
- Each partner obtaining independent legal advice can help ensure they understand the agreement and its consequences.
- Waiting until immediately before the wedding can create unnecessary pressure and may increase the risk of later disputes about how the agreement was negotiated.
- A prenup cannot validly predetermine every possible family law issue. For example, a marriage contract cannot determine future parenting time or decision-making responsibility.
- Ontario law also prevents a marriage contract from limiting certain statutory rights relating to the matrimonial home.
This article provides general information about Ontario family law and is not legal advice. Couples considering a prenup can speak with a Toronto prenuptial agreement lawyer about their particular circumstances.
Mistake #1: Not Providing Complete Financial Disclosure
One of the most significant mistakes when preparing a prenuptial agreement is failing to exchange accurate information about finances.
Before agreeing to give up or change rights that would otherwise exist under Ontario family law, both partners should have a meaningful understanding of the other’s financial circumstances.
This can include information about:
- real estate;
- bank and investment accounts;
- business interests;
- pensions;
- significant personal property; and
- mortgages, loans and other debts.
Financial disclosure matters because Ontario’s Family Law Act provides circumstances in which a court may set aside a domestic contract, including where one party failed to disclose significant assets, debts or other liabilities when the agreement was made.
Trying to protect an asset by leaving it out of the disclosure process can therefore undermine the very agreement intended to protect it.
Mistake #2: Waiting Until Right Before the Wedding
Another common mistake is treating a prenup as a last-minute wedding task.
Giving one partner an agreement shortly before the ceremony can create pressure, particularly where wedding plans have already been finalized, and family and guests are involved.
There is no universal number of weeks or months that guarantees an Ontario marriage contract will be enforceable. However, starting early gives both partners time to exchange financial information, negotiate terms, obtain legal advice and carefully consider what the agreement means.
A prenup should be approached as an important financial contract, not another item to complete days before the wedding.
Mistake #3: Using the Same Lawyer for Both Partners
Both partners have different legal interests, even where they agree on the overall purpose of the prenup.
One lawyer should not be expected to independently protect both sides of the same negotiation.
Obtaining independent legal advice allows each person to speak privately with their own lawyer. That lawyer can explain what rights the client currently has, what rights the proposed agreement changes or waives, and the possible consequences if the relationship later ends.
Independent legal advice is particularly important because one basis on which Ontario courts may scrutinize a domestic contract is whether a person understood its nature and consequences.
Mistake #4: Assuming a Prenup Can Cover Absolutely Everything
A marriage contract can address many important financial issues, but couples do not have unlimited freedom to predetermine every issue that could arise in the future.
Under Ontario’s Family Law Act, spouses who are married or intend to marry can generally agree on matters such as ownership or division of property and support obligations.
However, a marriage contract cannot predetermine decision-making responsibility or parenting time for future children. Those issues must ultimately be addressed according to the law applicable when parenting decisions are made.
There are also special rules concerning the matrimonial home. A provision in a marriage contract that attempts to limit a spouse’s rights under Part II of Ontario’s Family Law Act is unenforceable.
This is one reason generic contracts downloaded online may not adequately address Ontario family law.
Mistake #5: Assuming a Prenup Is Only for Wealthy Couples
Prenuptial agreements are commonly associated with people who enter marriage with substantial wealth, but they can be useful in a much wider range of circumstances.
A couple might consider a marriage contract where one or both partners:
- own a home;
- have investments or savings;
- own or expect to inherit a family business;
- are entering a second marriage;
- have children from a previous relationship;
- expect a significant inheritance;
- have very different financial circumstances; or
- want greater certainty about potential spousal support or property issues.
For second marriages and blended families, a prenuptial agreement can also form part of broader financial planning, particularly where either partner has obligations or assets connected with children from an earlier relationship.
Mistake #6: Copying an Online Prenup Template
Online templates may appear inexpensive and convenient, but they may not reflect Ontario law or the couple’s particular financial circumstances.
A contract written for another province, country or legal system may use concepts that do not apply in Ontario. Even an Ontario template cannot automatically account for a business, pension, inheritance, matrimonial home, support waiver or other unique financial circumstances.
Poorly drafted language can also lead to disagreement years later about what the parties actually intended.
A properly drafted agreement should clearly identify the rights being changed and how different assets or obligations will be treated. An experienced family lawyer can assist with this process.
Mistake #7: Signing Without Understanding the Agreement
A person should understand much more than the individual words in a contract before signing it.
They should also understand what the agreement changes compared with the rights and obligations that could otherwise apply under Ontario family law.
For example, a provision dealing with spousal support or property division may have significant financial consequences many years after the contract was signed.
Ontario law allows courts, in specified circumstances, to set aside domestic contracts where a party did not understand the nature or consequences of the agreement. This is another reason each spouse obtaining independent legal advice can be important.
Mistake #8: Forgetting About Future Changes
A marriage can last for decades, and financial circumstances can change substantially over that time.
Someone may start a business, stop working to care for children, receive an inheritance, purchase real estate or experience a major change in income.
Couples preparing a prenup should therefore consider whether the agreement appropriately addresses foreseeable changes and whether particular provisions should be reviewed following major life events.
Marriage contracts can also be amended if both spouses later agree to change their arrangements, although Ontario’s formal requirements apply to amendments as well. Under section 55 of the Family Law Act, a domestic contract and an agreement to amend or rescind it must be in writing, signed and witnessed to be enforceable.
What Makes a Prenuptial Agreement Valid in Ontario?
Ontario’s Family Law Act establishes important formal requirements for domestic contracts.
A marriage contract must be:
- in writing;
- signed by the parties; and
- witnessed.
Those formalities are only part of the analysis.
Issues such as financial disclosure, whether each person understood the agreement, the circumstances surrounding negotiation and general contract-law principles can also become important if an agreement is later challenged.
Couples can reduce uncertainty by starting the process well before their wedding, exchanging meaningful financial disclosure and having each partner obtain advice from their own family lawyer.
Speak With a Toronto Prenuptial Agreement Lawyer About Your Domestic Contract Today
A carefully prepared prenuptial agreement can provide greater certainty about finances, property and support, but mistakes during the drafting and negotiation process can create significant problems later.
Starting early, providing meaningful financial disclosure, ensuring the agreement complies with Ontario law and obtaining independent legal advice can help both partners make informed decisions before signing.
If you are considering a marriage contract before or during your marriage, contact Gelman & Associates or call 1-844-736-0200 to book a consultation with a Toronto prenuptial agreement lawyer. Our family law team can assist with drafting, reviewing and advising on marriage contracts throughout Ontario.
Disclaimer: This article provides general information about prenuptial agreements and family law in Ontario. It is not intended to provide legal advice. For advice about your particular circumstances, consult with a family law lawyer.
