When should I prepare a will?
ROBERT A. LEWIS
by Robert Lewis
While some people view cohabitation agreements in a negative light as a strategy to make it easier to end relationships, they can actually help draw couples closer together, particularly if they are negotiated in an open and honest manner. Differences in how spouses manage money are often cited as a major factor in breakups. Designing a mutually acceptable financial and legal framework can help the couple take their relationship to the next level.
A cohabitation agreement is a legal contract that addresses a couple’s collective and individual rights and obligations. Along with the ownership of current and future assets, a sound agreement addresses financial matters such as debt obligations.
To be considered a legally binding document, an agreement must be in writing, signed by both parties, and the signatures properly witnessed and dated. A well-structured agreement identifies the parties and the date the couple begins to live together, provides some background and states one or more goals. It then sets out each person’s obligations and responsibilities both during the relationship and in the event that the relationship ends.
Cohabitation agreements usually deal with financial issues, and address who will be responsible for managing and owning property, and paying off debts during the relationship. Spousal support is another important area to address, particularly if the couple plans to have children. An agreement might state, for example, that each person keeps whatever property they owned before they started living together, even if they break up. Couples who want to remain completely financially independent can negotiate agreements stipulating no spousal support and no sharing of property in the event of a breakup.
It is important to note that under Ontario law, common-law couples and married couples have different property rights. Only married couples have the right to claim equalization of property build-up during the course of the marriage. This means that married spouses share equally in what was accumulated during the marriage. Under the Family Law Act, common-law couples cannot make a property claim, regardless of how long their relationship lasted. The presumption is that each common-law spouse keeps whatever property they owned at the end of the relationship.
Common-law couples can, however, acquire interests in each other’s property through a legal doctrine called unjust enrichment. This doctrine applies when one spouse accumulates assets through the contribution of the other spouse. If a common-law spouse can show that their contributions during the relationship led to an unjust enrichment, they may be entitled to compensation. A properly drafted cohabitation agreement can clarify post-breakup property rights. The agreement might stipulate that all contributions to each other’s property are gifts,
for instance, or that they entitle the contributing spouse to a share in the property.
The best cohabitation agreements involve independent legal counsel for each party. This makes it much more difficult for a spouse to claim that he or she felt pressured to sign the original agreement. Courts have been known to set aside cohabitation agreements that involved only one lawyer.
The best way to determine if a cohabitation agreement is appropriate for you, start by discussing the matter with your partner. If you both agree, the next step is to sit down with a lawyer.
Rob Lewis practices Real Estate, Wills and Estates and Corporate Law in Ottawa. Rob can be reached at:
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