How Domestic Contracts Work in Ontario
Prenups and Cohabitation Agreements
When couples move in together or prepare to get married, conversations about finances, property and what happens if the relationship ends are not always easy. However, putting these arrangements in writing can provide clarity and help couples understand their financial rights and obligations.
In Ontario, these agreements are commonly referred to as domestic contracts. Two of the most common types are marriage contracts, often called prenuptial agreements or “prenups,” and cohabitation agreements.
Understanding how these agreements work can help couples make informed decisions before taking the next step in their relationship.
What Is a Domestic Contract?
Under Ontario's Family Law Act, a domestic contract can include a marriage contract, cohabitation agreement or separation agreement. These agreements allow couples to establish certain rights and obligations relating to their relationship and, in some circumstances, what happens if they separate. Ontario
A domestic contract can address matters such as:
- Ownership and division of property
- Financial obligations
- Spousal support
- Certain matters relating to the settlement of the couple's affairs
- Other financial arrangements agreed upon by the parties
The exact terms that can be included depend on the type of agreement and the circumstances of the couple.
What Is a Prenuptial Agreement in Ontario?
In Ontario, what people commonly call a prenup is generally referred to as a marriage contract.
Under section 52 of the Family Law Act, people who are married or intend to marry can enter into a marriage contract addressing their respective rights and obligations during the marriage, upon separation, dissolution of the marriage or death. This can include property ownership and division and support obligations. Ontario
A prenup can therefore provide couples with an opportunity to discuss financial matters before getting married rather than trying to resolve those issues during a separation.
It is important to understand, however, that a marriage contract cannot simply override every right available under Ontario law. For example, parties cannot waive an obligation to pay child support. Child support is the right of the child to receive. While not common, there are cases where adult children come back and sue their parents for waiving child support.
What Is a Cohabitation Agreement?
A cohabitation agreement is designed for couples who are living together, or planning to live together, without being married to one another.
Under Ontario's Family Law Act, couples can use a cohabitation agreement to establish their respective rights and obligations during cohabitation, upon ceasing to cohabit or upon death. Matters can include property ownership and division and support obligations. Ontario
A cohabitation agreement can be particularly useful when one or both partners enter the relationship with significant assets, property, investments, debts or other financial considerations.
If the couple later marries, Ontario law provides that their cohabitation agreement is deemed to be a marriage contract. Ontario
What Can a Prenup or Cohabitation Agreement Cover?
The appropriate terms will depend on each couple's circumstances.
A domestic contract may address issues such as:
Property
Couples can establish how certain property will be treated during the relationship and what may happen to that property if they separate.
This can be particularly relevant when one person owns a home or has significant assets before the relationship begins.
Debts
The agreement can address financial responsibilities and how certain debts are treated.
Spousal Support
A domestic contract may address spousal support obligations. The enforceability of specific provisions can depend on the circumstances and the applicable law.
Financial Contributions
Couples may also want to clarify how they will approach expenses, savings, investments and other financial matters during their relationship.
Estate Planning Considerations
Domestic contracts can also address certain matters that arise upon death. However, a domestic contract should be considered alongside a couple's wills and broader estate planning.
Can a Prenup Decide Who Gets Custody of the Children?
This is an important limitation to understand.
A marriage contract or cohabitation agreement cannot be used simply to predetermine decision making responsibility or parenting time for children. Ontario's Family Law Act specifically excludes these matters from the provisions that can be established through marriage and cohabitation agreements. Ontario
The best interests of the child remain an important consideration when parenting issues are determined.
Does a Domestic Contract Have to Be in Writing?
Yes.
Ontario's Family Law Act provides that a domestic contract, or an agreement to amend or rescind one, is unenforceable unless it is in writing, signed by the parties and witnessed. Ontario
This is one reason it is important not to rely on informal conversations or verbal promises when making significant financial arrangements with a partner.
Should Both Partners Have Their Own Lawyer?
Obtaining independent legal advice is an important part of the process.
Each person should have the opportunity to understand what they are agreeing to, the legal consequences of the agreement and whether the proposed terms reflect their circumstances.
A lawyer can also help identify issues that a couple may not have considered and explain how Ontario family law applies to their particular situation.
When Should You Sign a Prenup?
Ideally, a marriage contract should be discussed and prepared well before the wedding.
Leaving the conversation until the last minute can create unnecessary pressure and may raise additional concerns about whether both parties had adequate time to review and consider the agreement.
The same principle applies to cohabitation agreements. If you are planning to move in together, it is generally better to discuss the agreement before moving in rather than waiting until after the relationship has become financially intertwined.
Can a Domestic Contract Be Challenged?
A domestic contract is not automatically enforceable simply because both people signed it.
Ontario's Family Law Act contains circumstances in which a court may set aside a domestic contract or a provision within one. The circumstances can include issues surrounding disclosure, understanding or other factors affecting the validity or enforceability of the agreement.
For that reason, having a properly prepared agreement and obtaining appropriate legal advice before signing can be important.
A Prenup Is About Planning, Not Predicting a Separation
Discussing a prenup or cohabitation agreement does not necessarily mean a couple expects their relationship to end.
For many couples, the process is simply an opportunity to have an open conversation about finances, property and expectations before combining their lives.
A carefully prepared agreement can provide clarity and reduce uncertainty about financial issues if circumstances change in the future.
Speak With an Ontario Family Lawyer
Every relationship and financial situation is different. Whether you are purchasing a home together, moving in with a partner, getting married or bringing significant assets into a relationship, a domestic contract may be worth considering.
A family lawyer can review your circumstances, explain your options and help you understand the legal implications of entering into a marriage contract or cohabitation agreement.
Rimawi Law provides family law services to clients in Belleville and the surrounding communities. Contact our office to discuss your circumstances and learn how we may be able to assist. (613) 779-1347
This article provides general legal information and is not intended to provide legal advice. Every family law matter is different, and you should obtain legal advice about your individual circumstances.
