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What is a cohabitation agreement and how might it work for us?

For many couples in Canada, marriage has lost its appeal. As a result, some couples decide to live together, without an actual ceremony. While they may feel as though they are married, should they decide to end the relationship, they will likely quickly be reminded that they are in fact not married. This is because common-law couples who cohabitate do not have the same rights as those who are married and divorcing. For example, when a married couple in Ontario divorces the net family property will be divided 50-50.

Fortunately, there is something an unmarried couple living together can do to protect themselves should the relationship come to an end. They can create a cohabitation agreement. Put simply, a cohabitation agreement lays out how the following will handled:

  • Which property will be split
  • How the property will be divided
  • How spousal support will be addressed
  • How joint debts will be paid

Similar to the prenuptial agreement we wrote about in our last post, in the course of creating a cohabitation agreement, each person will provide full financial disclosure. This means that in addition to disclosing assets, debts will be disclosed as well. To be considered legitimate should a couple split, each party needs to have his or her own lawyer and neither can be coerced in to signing it.

Because a cohabitation agreement can have such a great impact on the lives of those who are a party to it, it is vital that the lawyer each person has working for him or her understands how to create a solid agreement of this nature.

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