3 Reasons Why You May Wish to Consider a Prenup in Canada

Are you planning to get engaged, or are you recently engaged? A prenuptial agreement (or “prenup” for short) may be the last topic you or your partner want to have a conversation about right now; however, when two people come together, it is a partnership, and you are joining your assets. Stay informed—here are three reasons why you may wish to consider a prenup.

What is the Purpose of a Prenup?

A prenup is a legally binding contract that sets out rules about the division of assets in the case of marriage breakdown or of one spouse’s death. It can cover a variety of issues from assets, debts and property rights (e.g. separate or marital property), to division and attribution of earned income during marriage, to spousal support and more. Its purpose is to ensure assets are distributed as desired, rather than as the law would determine in the absence of the prenup, in the event of separation or of a spouse’s death.

3 Reasons Why You May Wish to Consider a Prenup

1. A Stronger Foundation for Marriage

Popular commentary may imply that a prenup is bad for your marital health as it is a sign of a lack of faith in and commitment to the marriage. But drafting the prenup, though it can require difficult conversations, may provide a very useful side benefit—making plans when you are most happy together. After all, finances are a leading cause of divorce and you most likely have to be able to talk comfortably about them with the person you are marrying. Direct, upfront communication may even build a stronger foundation for marriage with the spouses embarking on married life together with a clear understanding of each other’s financial needs, goals and concerns.

2. The Power to Determine How Specific Assets will be Treated

You may wish to determine how specific assets, such as an ownership stake in a business or family business, investments, or any other possessions with monetary or even sentimental value, will be treated—providing you with certainty about what would happen to these assets after a divorce.

For example, if you own an income-generating asset such as real estate which requires regular investment to maintain and is not your marital home, would you wish the asset to be considered separate from the joint marital property as long as the regular investment continues to come from you?

In Ontario, assets exiting prior to marriage, if not commingled during the marriage, may be excluded from matrimonial assets. As well, future gifts and inheritances of any type, if not commingled, are not considered matrimonial assets. It is important, however, to understand that under the Family Law Act of Ontario, a marital home is treated differently, and there are certain rights under the Act that even a prenup cannot change. For an overview, be sure to read dividing property when a marriage or common law relationship ends in Ontario.

Here are two important points from the piece:

  • When a marriage ends for any reason, property acquired during a marriage must be split equally (and can include your marital home, car, business, furniture, pension, and money).
  • Any increase in value of property that you owned before the marriage (even if one of you owned the home prior to marriage by receiving it as a gift or inheriting it), is divided equally.

3. An Ability to Leave an Unhappy Marriage

With legal and financial protection in place, a prenup enables both spouses the choice to leave an unhappy marriage having clear expectations of what will happen, rather than becoming trapped due to financial uncertainty. This is particularly significant where a spouse chooses to give up their career to take care of the family as alimony issues would have been written into the agreement.

The Bottom Line

Rather than viewing a prenup as preparing for a marriage breakup, it can be viewed as working together towards how you and your partner can both be transparent to make the upcoming marriage a long and happy one.

Lastly, while a legal professional should be consulted when discussing a prenup, here are some basic tips prior to drafting a prenup in Canada:

  1. Prenups are enforceable as long as they’re valid; however, laws regarding such agreements can vary by province.
  2. It is wise that to engage your own lawyer rather than sharing one with your partner.
  3. Take your time when drawing up a prenup and be sure to review prior to signing to ensure all concerned interests have been represented.

In this article, we have provided an overview of prenups and reasons why you may wish to consider having one. We advise you to consult with a trusted professional who is well versed in prenups (or family law) to assist with your particular situation. At Bloom Investment Counsel, Inc. we are happy to work with all your trusted partners to protect, preserve and build your wealth.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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