Cohabitation: What Is It?
When two people live together but are not married, it's called cohabitation. You become "common law" as soon as you move in together. Certain rights (such the ability to split payments) could not be available until after two years of cohabitation, depending on the terms of the benefits package.
In daily life, this partnership is comparable to marriage. That is a completely different matter, though, if the relationship ends. Each spouse in a marriage is entitled to half of the increase in the family's assets, according Ontario law. Common-law spouses do not have the same choice, thus it may be difficult to divide any shared assets fairly in the event that the relationship dissolves. This is why it's usually a good idea to establish a cohabitation agreement.
A Cohabitation Agreement: What Is It?
For unmarried partners, a cohabitation agreement is like a prenuptial agreement. If you don't get one, you won't have any legal protection for your assets during a divorce. This simply safeguards your financial interests; it has no bearing on your legal relationship status. The cohabitation agreement can be drafted to become your marriage contract if you later decide to be married.
A cohabitation agreement might not be necessary if neither spouse has any assets to discuss at the beginning of the partnership. The homeowner, however, will probably want a formal arrangement protecting the equity they invested in the house if your husband owns it and you move in. In addition to whatever assets you may have, a cohabitation agreement will specify how any debts will be divided between you two. Even the subject of spousal maintenance may be covered.
Child support and custody issues are handled independently and are not covered by a cohabitation agreement. It is impossible to prepare for child-related issues in advance. A court has the authority to evaluate custody and access agreements to make sure they are in the best interests of the children, even if you specify them in your agreement or forgo child support.
How Can a Cohabitation Agreement Be Obtained?
Signing important documents like these requires more than just writing something up on your computer. The agreement is unlikely to be upheld in court if you do not obtain independent legal advice and have it prepared in accordance with the law. Use the following procedures to draft a cohabitation agreement that is enforceable:
Seek personal advice. Each party must have their own legal advice if you want to make sure that a cohabitation agreement is completed appropriately. This is to ensure that before signing the agreement, you have both had a lawyer look it over and that you are aware of its ramifications. Before you meet with a lawyer, decide which factors are most important to you and make a list of the assets you want to protect.
List the subjects you would like the agreement to address. It's usually preferable to decide how to divide assets in the event of a divorce while you're still happy with one another. Make a list of the things you would like to include in a cohabitation agreement jointly. Terms on:
Division of property
Support from the spouse
Pensions, inheritances, or other resources to protect
All upcoming assets, liabilities, and properties purchased in concert
Share all of your financial information. Both of you will need to contribute to this.
You must be truthful about all of your current assets and obligations if you want the agreement to succeed.
On the list you already created, fill in the details of everything you wish to include in the cohabitation agreement: your pension, your income and debts, your investments and RRSPs, and even a possible inheritance from your aunt. Be as thorough and explicit as you can, and don't withhold anything.
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