A prenuptial agreement, commonly called a prenup, is a legal contract signed by two people before they get married. It outlines how assets, debts, and financial responsibilities will be handled during the marriage and in the event of a separation or divorce.
While often associated with wealth protection, a prenup can benefit any couple by providing financial clarity and setting expectations.
What Does a Prenup Do?
A prenup helps couples establish financial guidelines before marriage. It serves to:
- Protect individual assets acquired before the marriage
- Define how property and debts will be divided if the marriage ends
- Set terms for spousal support or waivers of support
- Clarify financial rights and obligations during the marriage
- Minimize costly legal disputes in case of separation or divorce
Why Get a Prenup?
There are many reasons why couples choose to get prenups:
- Asset Protection – Safeguards property owned before marriage, such as homes, investments, and businesses. Including a snapshot of what you’re bringing into your marriage makes it easier to differentiate between what is “family property” (which gets divided if you split) and “excluded property” (which doesn’t)
- Debt Protection – Ensures one spouse isn’t responsible for the other’s pre-existing debts
- Financial Transparency – Encourages open and honest discussions about finances before marriage
- Avoiding Lengthy Legal Battles – A prenup can simplify divorce proceedings by pre-determining key financial aspects. It’s often much easier to agree on these things at the beginning of your relationship, instead of at the end
- Protecting Family Wealth or Inheritances – Helps preserve assets intended for children from previous relationships or family estates
- Business Interests – Prevents a spouse from claiming ownership of a business in case of divorce
What Does a Prenup Protect?
A well-crafted prenup can protect various financial aspects, including:
- Pre-marital assets – Property, savings, investments, and businesses owned before marriage
- Future earnings and business interests – Ensures one spouse’s business remains independent
- Retirement savings and pensions – Determines how these funds will be treated if the marriage ends
- Spousal support – Can set or waive support obligations
- Debt liability – Protects a spouse from being responsible for the other’s debts
- Inheritance and family wealth – Ensures generational wealth remains within the intended family line
What Can a Prenup Include?
A prenup can be customized to meet a couple’s unique needs. Common inclusions are:
- Asset and debt division – How property and liabilities will be handled in case of divorce
- Spousal support – Whether one spouse will receive financial support if the relationship ends, including the amount and duration of support payments
- Inheritance rights – Protecting future inheritances from being treated as family property, no matter how they are used
- Ownership of businesses – Determining how business interests will be treated in case of separation
- Financial responsibilities during marriage – Clarifying who will cover household expenses, investments, and debt repayment
- Estate planning considerations – Deciding what your obligations are to each other when it comes to making your will
What Happens If You Don’t Get a Prenup?
We like to say that you already have a prenup, whether you know it or not. What we mean when we say that is that if you don’t make your own prenup, the standard rules set out in your province’s family law will be used to decide what happens to your property if you separate. These laws effectively take the decision out of your hands if you and your spouse cannot agree.
Family law is different in every province, but you can typically expect:
- Equal division of marital assets – Property acquired during marriage is typically split 50/50
- Spousal support – One spouse may be entitled to financial support
- Debts may be shared – Even if one spouse incurred the debt alone, the other may still be responsible for part of it
- Business ownership risks – Without a prenup, a spouse may be entitled to a portion of a business
- Legal disputes – The lack of a prenup can lead to lengthy and expensive legal battles
What Happens If You Sign a Prenup and Get Divorced?
If a couple divorces with a prenup in place, the agreement will dictate how assets, debts, and financial matters are handled. Courts in Canada generally uphold prenups as long as they meet the following conditions:
- Full financial disclosure – Both parties must have disclosed their assets and debts before signing
- Independent legal advice – Each party should have had the opportunity to consult with their own lawyer
- Fair and reasonable terms – If a prenup is deemed excessively one-sided, it may be challenged
- No coercion or duress – Both parties must have signed the agreement voluntarily
If the prenup meets these criteria, it will typically be enforced, making the divorce process smoother and less contentious.
How to Get a Prenup
Getting a prenup in Canada involves a few key steps:
- Discuss the Agreement – Have an open and honest conversation with your partner about why a prenup is important. Check out the article in our library about how to talk to your partner about making an agreement if you’re finding starting this discussion to be challenging
- Identify Assets and Debts – Make a full list of each partner’s assets, income, and liabilities that they are bringing into the marriage
- Determine Terms – Outline how assets, debts, and financial responsibilities will be handled during and after the marriage. Our course content will help you understand the different options available to you, and how to determine which is the right fit for your relationship
- Draft the Agreement – Work with a professional or use a reputable online prenup builder like Jointly to create a legally sound document
- Consult Lawyers – Although it’s not required in every province, it’s a good idea for each person to get independent legal advice to ensure that you both understand the agreement and think that it’s fair. This makes it more likely that your agreement will be upheld in the future if there is a dispute about it
- Sign and Witness the Agreement – The prenup must be signed by both parties, with witnesses present
Pros and Cons of a Prenup
Pros:
- Protects pre-marital assets
- Clarifies financial expectations
- Reduces conflict in case of divorce
- Protects business and inheritance interests
- Ensures debt protection
Cons:
- May feel unromantic
- Cost to get a prenup can vary significantly
- Could be challenged if unfair
- Needs updates if financial circumstances change
When Do You Need a Prenup?
While a prenup isn’t required for marriage, certain situations make it a smart choice:
- If you own significant assets before marriage
- If you or your partner have substantial debts
- If one of you owns a business
- If you expect to receive a large inheritance
- If you have children from a previous relationship and want to protect their future inheritance
- If one partner earns significantly more than the other
Even if these circumstances don’t apply, we think a prenup is a good idea for everyone. If nothing else, it establishes what assets each party is bringing into the marriage and ensures both of you are on the same page about financial expectations in the future. A custom agreement is also more likely to fit your relationship better than the one-size-fits-all option established by provincial law.
FAQs
Can a prenup be changed after marriage?
Yes, a prenup can be modified after marriage, but both spouses must agree to the changes. This is called a postnuptial agreement.
Are prenups legally binding?
Yes, prenups are legally binding in Canada, provided they meet legal requirements, including full financial disclosure, independent legal advice, and fairness.
What makes a prenup invalid?
A prenup may be invalid if:
- One party was coerced into signing
- There was a lack of full financial disclosure
- The agreement is excessively unfair to one party
- One party didn’t receive independent legal advice
Do prenups expire?
Prenups do not automatically expire, but they can include clauses that require review or termination after a certain period. Couples can also revise them as needed. We recommend reviewing your prenup whenever you have a significant life change, to ensure that your agreement is still the right fit for both of you.
A prenup isn’t just for the wealthy, it’s a practical financial planning tool for any couple. At Jointly, we make prenups affordable, accessible, and easy to create online.
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I founded Jointly because I want to empower more Canadians with the knowledge and tools to create relationship agreements that work for them, at a price they can afford. My big dream? That reaching more Canadians with Jointly ultimately keeps more families out of the court system when relationships breakdown, which can be slow, expensive and traumatic. (I may or may not have personal experience with this 😅)
When I'm not lawyering, I'm most likely hiking with my dogs, kayaking the coastal waters around North Vancouver, or hitting the sauna and cold plunge.
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