Cohabitation Agreements: What You Need to Know
Like a prenuptial agreement, cohabitation agreements may not be the most romantic aspect of a relationship, but they are a practical tool to protect your assets and children, if you have any. Many couples nowadays choose to live together without marriage, and a cohabitation agreement helps keep things clear financially.
What is the Purpose of Cohabitation Agreements?
A cohabitation agreement is a legal contract between unmarried couples who live together. It outlines the distribution of assets, responsibilities, and financial arrangements if you choose to break the relationship. The agreement also details arrangements for shared property, like the home you live in, and specifies how everyday expenses and savings will be managed.
They are particularly important because unmarried couples don’t have the same legal protections as married couples. Without such an agreement, you may have no right to financial support or a share in the property if the relationship ends. Each partner should seek independent legal advice to ensure the agreement is fair and reflects their best interests.
Why Consider a Cohabitation Agreement?
1. To protect your assets
Under the Ontario Family Law Act, married spouses have the right to seek an equal division of property acquired during the marriage. This legislation ensures that upon the dissolution of a marriage, both spouses are entitled to share the wealth accumulated during their union, though there are certain exceptions to this rule.
Contrastingly, for common-law partners, the scenario is quite different. In the event of a relationship ending, partners in a common-law partnership do not automatically have the legal right to claim an equal share of the property acquired during their relationship.
2. Keep things clear financially
You can go as much in detail as you’d like when it comes to finances. The agreement clearly outlines who is responsible for specific expenses, such as rent, utilities, groceries, and other household costs. You can also choose which assets and incomes remain separate, protecting each person’s financial independence.
It protects you from any debt your partner accumulated before the relationship, during, and after. At the same time, it also addresses how joint debts will be handled, so each partner clearly knows their financial responsibilities.
3. To protect your children’s interests
If you have children from your previous relationship, you can mention your financial responsibilities towards them. If you have children from your current relationship, you can outline each other’s financial responsibilities towards them if the relationship falls apart.
It can detail financial arrangements for the children, including provisions for their daily needs, education, healthcare, and other expenses. You can also include with whom the children will live and how visitation will be managed.
4. Avoid conflict in the future
It specifies how debts, both existing and incurred during the relationship, are to be handled, which will prevent a lot of fights in the future. Knowing that there’s a plan in place for various eventualities can reduce stress and emotional turmoil during difficult times.
Main Components of a Cohabitation Agreement
1. Assets and Liabilities: Detail each partner’s assets and liabilities at the start of cohabitation and agree on how future assets and debts will be handled.
2. Property Arrangements: Outline what will happen to the property you live in and any other real estate investments.
3. Income and Expenses: Decide how you will manage day-to-day finances, including joint bank accounts, bills, and savings.
4. Children and Dependents: Address issues related to the care of children or dependents, keeping in mind that the agreement cannot supersede legal obligations.
5. Separation Terms: Specify the process for property division, debt responsibility, and other financial matters if you separate.
Common Misconceptions About Cohabitation Agreements
1. “Common-Law Marriage” Security
Many couples believe living together long-term sometimes believe they have similar legal protections as marriage, so they don’t need a cohabitation agreement.
2. Informal Agreements Suffice
Verbal agreements or informal written notes are generally not enforceable in court. A formal, legally drafted cohabitation agreement is necessary.
Do I need to consult a family lawyer before signing a cohabitation agreement?
Yes, absolutely, consulting a family lawyer before signing a cohabitation agreement is highly recommended. This is because a lawyer can ensure that the agreement covers your rights and interests and is legally sound. They will also offer you advice and identify any potential issues you might not have considered.
Having independent legal advice for each partner is the best step to prevent any claims of unfairness or coercion. In short, a family lawyer’s guidance is invaluable in making your cohabitation agreement a solid and fair document.
Can I make changes to the cohabitation agreement?
Yes, you can certainly make changes to a cohabitation agreement. Life is constantly changing and when circumstances evolve, you will have to make changes to the agreement to accommodate them. Whether it’s changes in financial status, the birth of a child, or other significant life events, the agreement can be modified accordingly. However, it’s important to note that both partners must agree to these changes, and they should be made in writing. With the right legal counsel, creating this agreement can be a smooth and affirming process. Contact Sterling Law today to draft a cohabitation agreement in Brampton.
