Colloquially known as “prenups,” domestic contracts are something many engaged or cohabitating couples consider unromantic or unnecessary. When you consider the potential cost of ending a marriage, however, a domestic contract makes good financial sense.
The Ontario Family Law Act allows couples to create domestic contracts that spell out how they will handle finances and other issues in the event their relationship breaks down. For cohabitating (unmarried) couples, these agreements are generally referred to as “cohabitation agreements.” For couples about to marry, they are typically known as “marriage contracts.”
Whether you’re tying the knot or entering a committed relationship, you want to make sure your agreement holds up over time. Here are several things to keep in mind as you draft your domestic contract:
Plan for Change
If you and your significant other are entering a cohabitation agreement but plan on marrying in the future, include language that transitions your cohabitation agreement into a marriage contract upon marriage.
It’s important for your agreement to explicitly recognize the likelihood that your circumstances will change. As the years pass, it’s inevitable that your employment, finances, and lifestyle will evolve. Make sure your agreement acknowledges that the contract is entered into with these changes in mind.
Get Independent Counsel
Your domestic contract is more likely to withstand challenges if you and your significant other retain independent legal counsel. Your lawyer will make sure you understand the agreement and what it means for your finances and your future.
Make a Full Financial Disclosure
For a domestic contract to be valid, both parties must fully disclose all assets to one another.