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Unmarried Couples Benefit From A Cohabitation Agreement

Unmarried Couples Benefit from a Cohabitation Agreement

Pre-nup? Post-nup? No-nup?

It probably comes as no surprise that divorce lawyers recommend a prenuptial agreement going into a new marriage, but what about couples that don’t plan to wed? Couples who are interested in protecting their assets with or without the matching rings should consider a co-habitation agreement (sometimes called a “no-nup” or “co-hab”). With the statistics changing on prenups, an influx of millennials have taken the steps to protect their assets in case of divorce or separation. Millennials marrying later, and at lower rates in general, may contribute to this shift.

While the laws on property and support vary from province to province, a family law case in Ontario evaded the idea of a “spouse”, as the couple had never cohabitated, despite being in a relationship for years. With cases like this, couples may benefit from a co-habitation agreement.

What does it mean to be common-law in Alberta?

Legally, parties who live “common-law” are referred to as adult interdependent partners or AIPS; however, common-law is the layman’s term and is used more-so in tax situations. Since 2003, Alberta defines any relationship a couple that lives together, with or without children, but are not legally married as an adult interdependent relationship. Relationships fall under this category if the parties fall under any of these situations:

  1. Two people have signed an Adult Interdependent Partner Agreement. (If two people are related by blood or adoption, they must sign this agreement to be considered adult interdependent partners.)
  2. Two people have lived together in a relationship of interdependence for three years or more.
  3. Two people live together in a relationship of interdependence and have a child together, by birth or adoption.

Surprising to some, someone who is separated from their legal spouse can be in an adult interdependent relationship, and still qualify for the support listed in the Property Division Act. Changes to the Property Division Act in 2020 will expand how property is divided between partners, but for now is decided on a case to case basis.

How do I talk to my partner about an agreement?

While prenuptials have the deadline of marriage, it may be difficult to time when to talk about a cohabitation agreement. In general, arrangements should be made before moving in, or large joint purchases. That being said, these are just guidelines and timing is more flexible with cohabitation. Broaching the subject may be difficult, and it is important not to put pressure on your partner during discussions. It should be a mutual decision, so focus on how you are invested in the relationship and it is insurance for an unexpected event. Give yourself and your partner plenty of time to make decisions, and be understanding that it may be a difficult conversation to have.

What is included in a cohabitation agreement?

What you decide to include in your agreement is ultimately up the you and your partner. However, here are the most common elements you will see in an agreement: first, property, as you may know, any property acquired during the marriage is considered matrimonial property and will likely be divided equally in the event of divorce. In the case of an adult interdependent relationship, property should be included. If you do have shared property, or plan to share property, this might be the strongest case to have a cohabitation agreement. In the agreement, you can outline how you wish to divide (or not divide)  property. Secondly, your business, if you own a business, the best thing you can do to protect this asset is to designate it as separate property in your agreement.

Our lawyers have years of experience drafting separation agreements and are knowledgeable in the nuances associated with the enforceability of separation agreements.  Let us assist you in obtaining the peace of mind which comes with a secure and well-crafted agreement. Contact us for a consultation today.

 

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