A prenuptial agreement is a contract between married parties or parties who intend to marry. In Ontario, this is called a marriage contract.
A cohabitation agreement is a contract between two parties that are cohabiting or intend to cohabitate.
Both prenuptial and cohabitation agreements are used when parties agree to define their respective rights and obligations during the relationship or marriage, separation, divorce and/or death.
Parties often consider this option when one or both parties wish to protect their property or future income upon separation and/or death. This is often the case for second relationships or parties with child(ren) from a prior relationship(s).
Pursuant to section 53(2) of the Family Law Act, a cohabitation agreement is deemed to be a marriage contract if the parties later marry and applies upon marriage, separation, divorce and/or death.
In addition to being important steps in a relationship, marriage and cohabitation create significant financial bonds and therefore it is usually useful to set out each party’s expectations. Both parties’ financial disclosure is required for this process to be effective.
Due to the long-term consequences of these agreements, legal assistance is recommended.