You may have heard of a pre-nuptial agreement (commonly called a “prenup”), a contract between two people before they marry. Prenups cover the essential financial aspects of the relationship, including the division of property in a divorce.
Cohabitation agreements serve the same purpose for unmarried partners. But when do you need a cohabitation agreement? In this post, an experienced British Columbia family lawyer answers common questions about “cohabs.”
What Is a Cohabitation Agreement?
Cohabitation agreements are legal documents signed by two individuals who live in the same home or are planning to move in together. They can address the handling of debts and assets during and after the relationship.
Cohabs may include the following:
- How finances will be handled during the relationship (e.g., credit cards, household expenses, etc.)
- Who will keep the property purchased together if the relationship ends
- Who will keep individual property acquired prior to the relationship
- Who is responsible for debt accrued before the cohabitation
- Who takes responsibility for shared debt
- How inheritances and family heirlooms will be divided
- Whether one partner will pay the other spousal support
Why Do You Need a Cohabitation Agreement in BC?
According to the BC Family Law Act (FLA), you and your partner are legally common-law spouses after two years of living in a “marriage-like relationship.” (If you have children, this period can be less for the purpose of determining spousal support.) Both same-gender and opposite-gender couples can be common-law spouses in British Columbia.
If you and your common-law spouse do not have a cohabitation agreement, your shared debt and assets are divided equally when you separate. This holds true even if you did not intend to share your property with your partner — and even if you didn’t add their name to real estate titles.
Separating shared and individual assets is not always easy. Each partner must prove what property they brought into the relationship if they plan to make an excluded property claim. If you co-mingled your assets or they increased in value, your partner may be entitled to a portion of this asset. A cohabitation agreement can prevent costly and upsetting legal battles by outlining such issues before you move in together.
When Do You Need a Cohabitation Agreement in BC?
The best time to sign a cohabitation agreement in BC is before you move in together. The second-best time is before you hit the two-year mark when the law considers you married. However, you can draft and sign an agreement at any time during your cohabitation.
BC courts will generally enforce cohabitation agreements as long as they are fair. They may not enforce agreements they feel are substantively unfair because of unequal bargaining power between the parties. They also typically don’t enforce child support, parenting time, or parental guardianship clauses.
What Are the Benefits of Cohabitation Agreements?
Like married couples, common-law couples benefit from relationship agreements. Cohabitation contracts offer the following benefits:
- Protecting business assets, premarital property, and family heirlooms
- Shielding one partner from debts amassed by the other
- Making joint decisions rather than having a judge decide
- Saving time and money over litigation
- Specifying how to handle disagreements (e.g., working with a mediator)
- Reducing friction and stress after a breakup
Need Help Drafting a Cohabitation Agreement? Contact Us Today
So, when do you need a cohabitation agreement? When you stand to lose more than your partner in a breakup. When you want the peace of mind of knowing your assets are protected. When you hope to reduce disagreement when a relationship ends.
For help drafting a fair agreement that is more likely to hold up in court, contact the experienced family law team at Pier Law & Mediation. Call us today at (604) 359-3159 or contact us online for a consultation.
