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Prenuptial Agreement, Cohabitation Agreement or Marriage Contract: What are they and is it for me?

If you are familiar with the division of assets in Ontario between common-law spouses vs married spouses or you have read my previous blog post, then you will know that in the event of relationship breakdowns, a complex calculation of assets is inevitable.

Equalization is available to married spouses and a claim to an equitable remedy is available for common-law spouses. This is where a prenuptial agreement, cohabitation agreement, or marriage contract can provide couples with tremendous benefits by giving them an option to avoid these complex calculations and litigation altogether. These agreements empower the couple to create a tailor-made agreement about what happens in case the relationship breaks down.

Prenuptial agreements, cohabitation agreements, or marriage contracts generally have the same goal in mind, and that is to protect your assets however spousal support terms can also be included but not terms regarding children. The difference between the three is determined by what type and stage of relationship you are in. If an agreement is made between partners who are intending to be married soon, then the agreement is called a “Prenuptial Agreement”. Agreements do not have to be made before marriage. If an agreement is made between partners after they are married, then the agreement is called a “Marriage Contract”. As for common-law spouses, an agreement entered into by the couple is called a “Cohabitation Agreement” regardless of whether they have started living together or intend to live together.

Is a prenuptial agreement necessary?

Couples who are dating normally do not think about the reality they are in even after moving in together or after their marriage. After all, no one enters a relationship with an anticipation of a divorce or separation. However, a prenuptial agreement will act as a precaution or a safety net in the unlikely event of the breakdown of a relationship. The prenuptial agreement will contain terms and conditions for the division of those assets and properties which will potentially save you precious time, thousands of dollars in legal costs, and emotional trauma from litigation.

Although this type of topic may be difficult to raise with your partner, it is very important that you have this talk because there can be serious financial implications when it comes to divorce or separation in terms of equalization payments or equitable claims. It would be prudent to discuss the arrangement of properties, assets, and debts with your partner as this will paint a better picture as to who is bringing what into the relationship and which assets require protection. A general rule of thumb is that properties or debts in an individual’s sole name remain theirs unless acquired jointly.

Sadly, almost 40% of marriages end in divorce. Do not fall into the trap that prenuptial agreements are only for the wealthy. Wealthy individuals indeed enter into prenuptial agreements because that is the wise thing to do. It will help protect your property and assets, which for most people will be their most significant asset, the matrimonial home. For example, if you owned a home that was worth $500,000.00 when you first purchased it but has now increased to $1,000,000.00, under the Family Law Act in Ontario, your spouse would be entitled to half of the present-day value of the matrimonial home which is $500,000.00 ($1,000,000.00 divided by two). On the other hand, if it was not your matrimonial home, then you would only share the value of the increase which would be $250,000.00 ($500,000.00 divided by two). If the parties prepared a prenuptial agreement, they could have written custom terms to determine how the property will be divided such as, upon sale of the property, each party shall receive an amount equal to the percentage of monies they had contributed to the property.

All couples wish for a happily-ever-after ending however that is not always what happens. It can be difficult to raise this issue with your partner but in a world where divorces, second marriages, and blended families are becoming more common, so are prenuptial agreements.


This blog sets out a variety of materials relating to the law to be used for education and non-commercial purposes only. The Author(s) of this blog do not intend the blog to be a source of legal advice. Please retain and seek the advice of a lawyer and use your own good judgment before choosing to act on any information included in the blog. If you choose to rely on the materials, you do so entirely at your own risk.

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