Do You Need a Cohabitation Agreement? Three Key Issues
A cohabitation agreement typically lays out terms for division of assets and spousal support when a common-law relationship comes to an end. Common-law relationships are defined differently across Canada; in Alberta, a relationship is considered to be a relationship of interdependence (or common law) explains Calgary family lawyer Sean O’Neil
, under the Adult Interdependent Relationships Act
when a couple has lived together for a continuous period of not less than three years. The Canada Revenue Agency
considers you to be in a common-law relationship when you have cohabited for 12 months. The question of when you are considered to be married at common law depends on the circumstances. The best thing to do to protect yourself is to assume that you are in a common-law relationship as soon as you move in together.
If you are planning to move in with a partner—or are already living together—do you need a cohabitation agreement? These are the most important questions to ask.
Is property involved?
The biggest misconception about cohabitation is that property will be split equally if the relationship ends. However, the rule of 50/50 asset division applies only to married couples. When a common-law partner seeks an interest in the other partner’s assets, the court conducts a complex analysis to determine what that partner has contributed to the asset (generally a house). The contribution will typically include cleaning, repairs, and mortgage payments. Simply living in a home does not automatically warrant being awarded part of the value. Even if the court finds one partner has contributed to the other partner’s property, there is no rule that says the asset has to be divided 50/50.
A cohabitation agreement can be used to clarify that a partner will not earn any interest in the other partner’s property throughout the duration of a common-law relationship. A cohabitation agreement could specify provisions that will allow the other partner to gain an interest in property over time, but, Mr. O’Neil advises, it is probably best to keep those terms simple.
Is one partner’s income substantially higher than the other?
As with property, common-law status does not mean that a lower-earning partner will be automatically entitled to spousal support if the relationship ends. Nonetheless, in the case of a long-term common-law relationship, the courts will usually find justification to award support to a partner who assumed childcare and/or home responsibilities while the other partner worked to provide income. In Alberta, the Adult Interdependent Relationships Act defines an interdependent relationship as one lasting more than three years, so that would be the starting point.
A cohabitation agreement can specify that the mere fact of parties living together is not intended to create a relationship of interdependence, and that no interdependent relationship is created by the cohabitation.
Does either partner have children?
When one common-law partner has children, the other partner can be held responsible for paying support after separation. This obligation arises by law, and it is very difficult for a partner to protect themselves by contract.
Other issues to consider
Because cohabitation agreements apply exclusively to non-marital relationships, a cohabitation agreement cannot and should not function as a prenuptial agreement. “Couples often ask me if they can use a cohabitation agreement as a prenuptial agreement if they decide to get married,” says Mr. O’Neil, “but the terms of a cohabitation agreement will no longer have effect if common-law spouses do marry.”
There is a no legal requirement to enter into a cohabitation agreement if you live with someone or are planning to. In Alberta, if you do have an agreement, there is no requirement to have it witnessed by lawyers, but it should be written down. Using witnesses is the best policy, so that the agreement cannot be denied at a later date.
Even though independent legal counsel is not mandated by law, as with all legal matters, it is always wise to proceed with caution. If neither partner has any assets and does not anticipate accumulating any, then a cohabitation agreement may be unnecessary. If one or other partner has assets, then they should consider getting a cohabitation agreement. A lawyer will typically charge around $500 to $750, and your partner may have to spend $300 to $500 to get independent legal advice.
is a Calgary barrister and solicitor focusing on family law, adoption law; child custody, child support, divorce, and visitation rights. He can be contacted at 403-910-0401 or
. Visit www.oneillaw.ca
for more information.
Elizabeth Cockle writes and edits for professional services firms and B2B companies. She cuts through the clutter of legalese, financialese, and corporatese to create marketing copy that speaks to clients in language they understand. She can be reached at 416-466-8171 or www.ecwriting.com
For more information, visit the Canadian-Lawyers.ca Marriage and Cohabitation resource centre
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