What is a Cohabitation Agreement?
Also sometimes called a “living together agreement”, “property agreement for unmarried couples”, or a “non-marital cohabitation agreement” is similar to a marriage or prenuptial agreement. It is a contract for couples living together that outlines an agreed-upon plan for what will happen to the couple’s assets and debts if the relationship ends.
These agreements are tailored to an individual couple in order to meet their specific needs. Generally, a cohabitation agreement focuses on what will happen upon the separation of a couple, but it can also state how division of labour (such as household chores) will be distributed as well as which household bills/expenses will be paid by which party during the cohabitation of the couple.
There are some things that a cohabitation agreement may not address. A cohabitation agreement cannot remove parental rights from a person, nor can it stipulate what will happen in terms of guardianship or childcare in the event of the relationship ending. Any legal agreement regarding child support or custody arrangement must be made after a relationship has come to an end and both parties have either separated or decided to separate.
A cohabitation agreement must be created in writing and requires the signature of both parties with a witness present. It is recommended that any cohabitation agreement be drafted by an experienced family lawyer.
Creating and Implementing a Cohabitation Agreement
Cohabitation agreements can be made between two people who are either planning to live together or who are currently living together.
The first thing that you and your partner should do when you decide to create a cohabitation agreement is to make a list of every asset and liability that each of you has, including property, debt, and finances (including all savings, TFSAs RRSPs, etc.). This clearly lays out what each party has before entering into the agreement. Keep in mind that failure to disclose any significant assets or liabilities could result in an unenforceable agreement.
Many people think that “DIYing” their agreement is good enough, however it is important to have a lawyer draw up your cohabitation agreement to ensure that it is legally enforceable. This is also important because it helps prevent anyone from signing the agreement without fully understanding the terms or under coercion. It is best if each party seeks independent legal advice regarding the creation of a cohabitation agreement so that they are fully informed and not in a position to be taken advantage of before signing.
With the help of a lawyer, you and your partner will have total control over what the agreement contains. You can draft up some ideas of what you would like your agreement to include and bring it to your lawyer, who will help you hone exactly what your cohabitation agreement should look like in order to best protect your interest in the fairest way possible.
If you and your partner may become married in the future, it is a good idea to include a stipulation in the agreement that states what will happen in the event of your marriage. You can have the cohabitation agreement continue as is after marriage, have it become void and plan to replace it with a prenuptial agreement, or have a plan in place to update the agreement upon marriage.
After signing, make sure that you revisit your agreement regularly and consider revising and updating it throughout your relationship. It is especially important to reconsider the terms of your agreement after a major milestone occurs, such as the birth of a child or when one party receives a large sum of money. Even without big changes like this, it is advised that couples revisit and update their cohabitation agreement every five years or so.
Can a Cohabitation Agreement Be Overturned?
In some cases, a cohabitation agreement can be set aside if it is determined that one party signed it under coercion or if one or both parties failed to disclose significant assets or debt when they made the agreement.
The most common reasons for cohabitation agreements being set aside are that: each party did not receive independent legal advice upon drafting the agreement and one of them claims that they were coerced into signing or did not fully understand what they were agreeing to, or, one or both parties failed to disclose significant assets or liabilities. The best way to avoid this is to ensure that both members of the relationship consult independent lawyers while drafting the agreement, so that there is a record of both parties being fully apprised of how the agreement is set up, making it harder for either party to claim ignorance or coercion at a later date.
Why Get a Cohabitation Agreement?
Sometimes people are resistant to the idea of getting a cohabitation agreement because they feel as if it begins a domestic arrangement with a lack of trust between partners, but in reality most people who have drawn up a cohabitation agreement say that it has contributed to the health of the relationship. This is because having a legal agreement in place reduces pressure on the relationship, facilitates communication regarding finances and the future, and provides peace of mind to both parties.
Here are a few of the benefits of getting a cohabitation agreement:
- It is a practical and respectful way to ensure that both members of the relationship are taken care of in a way that they deem fair if the relationship were to end.
- It gives both parties peace of mind and a feeling of control over the uncertainty of a potential future separation.
- Reduces the likelihood of difficult financial arguments during a separation, which is inevitably a stressful and emotional time.
- Prevents both parties from having the financial stress of having to pay litigation fees in order to fight for what they feel is owed to them after a separation.
- Makes it easier to resolve disputes over the handling of finances during the relationship, not just after it has ended.
It is also important to remember that you are under no obligation to sign a cohabitation agreement if the terms make you uncomfortable or your partner is pressuring you into signing it.
People are less likely to want a cohabitation agreement if neither member of the relationship has significant assets or liabilities, no children are involved, and neither party is financially supporting the other. However, even in these scenarios we do recommend drawing up a legal agreement in order to protect yourself and your partner from any unforeseen future events.
Are You Considering a Cohabitation Agreement? Trust Thomas and Associates
Thomas and Associates’ experienced divorce and separation lawyers can draft a cohabitation agreement that is customized to you and your partner’s specific situation so that both of your individual needs are covered. We understand the need for both parties to acquire independent legal advice and we can help make sure that both parties are fully informed and that your agreement meets all of the legal requirements.