As common-law relationships become more common in Canada, family lawyers are advising couples to consider entering cohabitation agreements.
Fraser MacLean, a family lawyer at MacLean Law in Vancouver, recalls one client’s surprise at learning his former girlfriend was entitled to half the growth of his assets in the two years the couple had been together. The woman was claiming a stake worth millions, he says.
The dispute “could have easily been avoided with a simple, inexpensive [cohabitation] agreement.”
Barry Nussbaum, a family lawyer and founder of Nussbaum Family & Divorce Lawyers in Toronto, says he sees lots of people calling in about cohabitation agreements.
“You see a rise in younger people doing it,” Nussbaum said.
Similar to a prenuptial agreement — or prenup — a cohabitation agreement sets out how cohabitating partners will divide their assets, and whether they will owe spousal support, in the event of a break-up.
Bringing up a cohabitation agreement may be unromantic, but many Canadians think it is practical to do them, says Katherine Kowalchuk, a senior associate at the Calgary law firm Getz Collins & Associates.
“From my experience, a lot of people see the value of setting out their intentions right from the start,” she said.
‘Less offended’
In most provinces, couples who cohabitate do not enjoy the same legal protections as married couples upon separation.
Married couples who divorce are generally entitled to half of the couple’s assets — such as their home, investments or business — even if an asset is only formally owned by one spouse, or only one spouse earned income. For cohabiting couples, the onus usually falls on individuals to prove in court that they are entitled to a portion of their partner’s assets or spousal support.
However, some provinces have passed legislation granting couples who live together the same legal protections as married couples, if certain criteria are met.
In Alberta, couples who have lived together for at least three years or have birthed or adopted a child together are treated the same as married spouses. In B.C., the standard is two years of cohabitation or having a child together.
“It definitely catches a lot of people by surprise when they first come in to see me,” said MacLean, of Vancouver firm MacLean Law.
Without a cohabitation agreement, separations can become more difficult and costly. For some couples, it can mean spending tens — if not hundreds — of thousands of dollars on legal battles.
As cohabitation becomes more common, many Canadians have either personally experienced or know people who have experienced the hardship of dividing assets after a break up, says Kowalchuk. These bad experiences can prompt couples to enter cohabitation agreements in future relationships.
“Both sides typically see the value in setting out the intentions of the party’s relationship in an agreement,” she said.
A cohabitation agreement records the partners’ separate net worth at the outset of the relationship, and outlines how the couple will share in expenses. It can clarify what assets are exempt from being divided if a couple breaks up.
Nussbaum says couples may be especially keen to enter a cohabitation agreement if they are financially well off. He mostly sees college-educated, high-income Canadian men and women in their 30s or above seeking these agreements.
‘A little bit neurotic’
While Nussbaum regularly prepares cohabitation or prenup agreements for clients, he does not think they are always necessary. An abundance of online information — where people can read all sorts of break-up horror stories — has made people “a little bit neurotic,” he said.
If the individuals have little to no savings, no property or business, it may not be in the couple’s best interest to make an agreement, says Nussbaum.
“[L]et’s say you’ve got a job in investment banking, and you’re doing really well in your 20s, early 30s, I don’t know if you want to run and do a prenup. … Do you want to make rules about what happens upon separation 20 years from now, after you have your children?”
But for some clients, it is clear they need one.
“If your father and mother are multi-billionaires, you’re nuts not to do a prenup,” said Nussbaum, who recommends speaking with a lawyer to determine the best course of action.
Kowalchuk says cohabitation agreements can even help foster lasting relationships.
“When parties have the ability to have more certainty and understanding about what the other person’s expectations are for the division of the financial responsibilities and how assets and debt is going to be treated … it sets people up for potentially a stronger relationship,” she said.
Chantal Heide, an author and relationship coach at Canada’s Dating Coach, says cohabitation agreements can be especially important for women, helping to ensure they are treated fairly after a split.
“I’ve been saying for several years now to women, never let somebody move into your home without a cohabitation agreement or a rental agreement,” said Heide.
She recommends women ensure their cohabitation agreements address child care. If one partner is expected to take on most of the child care responsibilities, they should be paid a salary by the other partner to make up for lost earnings, she says.
The process of negotiating these agreements is not simply beneficial if the relationship later ends, she says. It also helps to vet for an ideal partner.
“We are ensuring that the people we’re getting into a relationship with are aligned with us,” she said.
“Under no condition should anybody commit to somebody and then work backwards to figure out if they committed to the right person.”
Great breakdown of a topic many couples overlook. I liked how this post clearly explains rights, responsibilities, and common misconceptions in a simple way. Articles like What is the Cohabitation Agreement in Canada? really help readers understand legal protection before issues arise. Do you think more people should consider agreements earlier rather than after conflicts start? It also encourages informed conversations between partners and promotes clarity and long term peace.
I’ve been reading about cohabitation agreements in Canada and I’m curious—how detailed should they be? I want to understand how property, finances, and responsibilities are handled if a couple separates. This guide was really helpful: Cohabitation Agreement in Canada. Has anyone here used one before, and did it cover everything you expected?