Will My Prenup Hold Up When It Actually Counts?

Understanding prenups

A “prenup” is the everyday name for a marriage contract signed before marriage. Couples who live together without being married may enter into a cohabitation agreement. Both are forms of domestic contract under Ontario’s Family Law Act.

These agreements can help couples set out financial expectations and reduce uncertainty. But signing a contract does not guarantee that every term will be enforced.

The legal starting point

Section 56(4) of the Family Law Act allows a court to set aside a domestic contract, or a provision in it, where:

• A party failed to disclose significant assets, debts or other liabilities existing when the contract was made.
• A party did not understand the nature or consequences of the contract.
• There is another basis for setting it aside under the law of contract.

The facts matter. The three themes below help explain the kinds of circumstances that can be relevant; they are not a separate legal test.

What courts consider

1. Personal vulnerabilities

Language barriers, unequal financial knowledge and other imbalances may affect a person’s ability to understand an agreement or make an informed decision. An imbalance alone does not automatically invalidate the contract.

2. External pressures

Pressure from a partner or family member, misleading explanations and circumstances affecting a person’s freedom to decide can be relevant to a challenge. The court considers the evidence and the applicable legal grounds.

3. Procedural safeguards

Meaningful financial disclosure, independent legal advice, enough time to consider the terms and appropriate language assistance can support an informed process.

These safeguards are helpful, but they are not a guarantee. Similarly, the absence of independent legal advice does not, by itself, automatically invalidate an agreement.

Putting it together

The strongest preparation starts well before the signing date. Exchange meaningful financial information, allow time for questions and make sure each person understands what the agreement does.

Some terms are also subject to specific statutory limits. This article focuses on challenges under section 56(4), rather than every rule that may affect a domestic contract.

Let’s talk

Preparing or reviewing a marriage contract or cohabitation agreement takes care. If you are considering an agreement, have been asked to sign one or want advice about an existing contract, contact our office to discuss the next step.