Division of Property During Separation
In Ontario, the default rule under the Family Law Act is equalization of net family property, which means both spouses share equally in the increase in value of their assets during the marriage. A marriage contract can override this default.
What to Include:
- Clear statement opting out of the equalization of net family property (if desired)
- Custom formulas for property division
- Definitions of what constitutes “property” for the purpose of the contract
- Specific terms for how property will be appraised and divided in the event of separation
Why it matters: Couples may want to define their own rules instead of relying on court-imposed formulas, especially in second marriages or where one party brings significantly more assets into the union.
Exclusion of Business Assets or Inheritances
Under Ontario law, inheritances and certain gifts received during the marriage are already excluded from net family property unless they’re co-mingled (e.g., used to buy a jointly owned home). Business interests, on the other hand, are usually included unless specifically protected.
What to Include:
- Clauses explicitly excluding current and future business assets from division
- Identification of inheritances or gifts, with details on how they will be handled
- Instructions for separate accounts or ownership structures to maintain exclusion
- Provisions to protect growth in the value of excluded assets
Why it matters: Without such clauses, one spouse may be entitled to share in the value of the other’s growing business or inheritance if it becomes part of marital property.
Treatment of the Matrimonial Home
The matrimonial home holds a special legal status in Ontario. Even if one spouse owned the home before marriage, both spouses have equal possessory rights during the marriage and upon separation, unless otherwise specified in a marriage contract.
What to Include:
- Declaration of ownership rights (e.g., if one spouse will retain ownership regardless of use or occupancy)
- Terms for buy-out rights or sale procedures in the event of separation
- Provisions addressing post-separation possession, particularly if children are involved
- Explicit exclusion of the home from equalization, if applicable (note: this is complex and must be drafted carefully)
Why it matters: In many cases, failing to account for the matrimonial home leads to unexpected financial and emotional disputes during separation.
Ownership of Jointly Acquired Property
When couples acquire assets together—such as vehicles, investments, or real estate—it’s important to clarify how ownership and contributions will be treated.
What to Include:
- Definitions of joint vs. individual ownership
- Terms outlining percentage of ownership or contributions
- Protocols for how property will be valued, divided, or liquidated in case of separation
- Special clauses for gifts or unequal contributions toward shared purchases
Why it matters: Couples may not intend for property to be shared equally if one party contributed significantly more—this clause helps formalize that understanding and avoid later disputes.
Spousal Support Terms
Spousal support—also known as alimony—is often one of the most contentious issues in a separation. In Ontario, spouses have the right to waive or limit support in a Marriage Contract, provided the agreement is fair, informed, and not unconscionable at the time of enforcement. Courts may set aside a spousal support clause if it’s found to be significantly unfair.
What to Include:
Waiver or Limitation of Support Rights
- A full waiver of future spousal support by either or both parties
- A limited waiver that sets a maximum cap or restricts the circumstances under which support may be claimed
- A clause stating that both parties had independent legal advice before agreeing to the waiver
Why it matters: This protects parties—particularly high-income earners or second-time spouses—from indefinite or unexpected obligations, provided the waiver is considered reasonable at the time of enforcement.
Conditions Triggering Support
- Minimum length of the marriage or cohabitation period required before support obligations arise
- Triggers such as child–rearing responsibilities, career sacrifices, or health limitations
- Termination conditions, such as remarriage or cohabitation with a new partner
Why it matters: These conditions create a clear understanding of when and why support would become appropriate, reducing future disputes.
Duration and Amount of Payments
- Fixed duration of payments (e.g., 3 years post-separation)
- Specific monthly support amounts or formulas tied to income (e.g., 1.5% of gross annual income per year of marriage)
- Whether support will be reviewable or non-reviewable
Why it matters: These provisions offer predictability and allow couples to plan financially without relying on potentially costly court calculations or the Spousal Support Advisory Guidelines (SSAGs), which are often used but not mandatory.
Debt Responsibility
Addressing debt clearly in a Marriage Contract is just as important as dividing assets. Spouses can use the contract to assign responsibility for debts—whether incurred before or during the marriage—to avoid disagreements in the event of separation.
What to Include:
Pre-Marital vs. Joint Debts
- Clauses that explicitly exclude pre-marital debts (e.g., student loans, credit card balances) from shared responsibility
- Confirmation that each spouse remains solely liable for debts in their name prior to the marriage
- Identification of joint debts (e.g., lines of credit, mortgages) and how they will be handled
Why it matters: Ontario law doesn’t automatically assign debt liability during separation, so without clear contract terms, you may find yourself accountable for a spouse’s pre-existing obligations.
Clarifying Who Pays Specific Obligations
- Assignment of responsibility for current and future debts, such as car loans, tax liabilities, or personal loans
- Provisions for how payments will be made post-separation, especially for co-signed or joint accounts
- Rules for debt incurred during the marriage, including conditions for shared or individual use
Why it matters: This prevents disputes over who pays what if the marriage ends, especially when one party has greater access to credit or a history of financial mismanagement.
Preventing Future Financial Disputes
- Requirement for full financial disclosure before signing the contract
- Agreement that neither spouse will incur significant joint debt without consent
- Optional clauses for mediation or arbitration if debt-related issues arise later
Why it matters: Laying out financial expectations helps minimize surprises and legal battles down the line, especially when assets and liabilities become more complex over time.
Estate Planning and Death Provisions
While marriage contracts in Ontario are often used to address separation, they can also provide important guidance in the event of a spouse’s death. Including estate planning clauses ensures your agreement aligns with your overall financial and legal intentions, reducing confusion and potential disputes for surviving family members.
What to Include:
Rights to Inheritance or Survivor Benefits
- Confirmation of entitlement or waiver of inheritance rights from each other’s estate
- Clauses that either maintain or exclude the right to claim as a dependent under Ontario’s Succession Law Reform Act
- Allocation of RRSPs, pensions, or survivor benefits, particularly when children from prior relationships are involved
Why it matters: Without clear terms, a surviving spouse may have legal grounds to claim a share of the estate, even if the deceased’s will says otherwise.
Alignment with Wills and Insurance Policies
- Requirement that both parties update their wills to reflect the marriage contract
- Clause confirming that the contract takes precedence if there’s any conflict with a will or beneficiary designation
- Provision that both spouses agree to maintain consistent estate documents, including POAs and health care directives
Why it matters: Courts will look for consistency across legal documents. Misalignment between your marriage contract and your will could result in costly estate litigation.
Optional Life Insurance Clauses
- Agreement that one or both parties will maintain life insurance for the benefit of the other
- Specifications regarding minimum coverage amounts, beneficiaries, and duration
- Clauses permitting review or cancellation under certain conditions (e.g., remarriage or change in financial status)
Why it matters: Life insurance can serve as a fair, tax-efficient way to provide for a spouse or children—especially when other assets are excluded from inheritance.
