You’ve likely heard about signing a ‘Pre-Nup’ or Prenuptial Agreement before getting married as a way to protect your assets. A Prenuptial Agreement (as it is commonly referred to in the United States) is actually more than just a security measure for those with valuable assets, allowing both partners to clearly set out their financial responsibilities, obligations, and/or entitlements in the event of separation, divorce, or death. The name ‘Prenuptial Agreement’ alludes to the fact that this a contract signed between spouses before their marriage (nuptials), and while marriage is one big step in a relationship, we do recognize the validity of common-law relationships in Canada.
What is ‘Common-Law’?
In the case that you’re unfamiliar with the concept of a ‘Common-Law’ relationship, this is a recognized marital status in Canada where you’ve been living with your partner for a year (continuously) and/or where you and your partner have a child or parent/support a child together.
The name “Common-Law” comes from the fact that legal effect and recognition of this relationship status comes from a judicial assessment at the common law. Importantly, the definition of a ‘Common-Law Relationship’ does vary province to province, and it will be important that you understand the criteria for having your common-law status recognized by the laws where you and your spouse live.
How does ‘Common-Law’ status effect me?
The official recognition of this relationship status allows cohabitating spouses to be treated similarly to married spouses in various ways – such as filing income tax returns together, and possible entitlement to spousal support if you separate.
However, it is important to note that Canadian family law does treat common law spouses differently than those in a marriage on the issues of equalization and division of property. Meaning that while the law recognizes that married spouses are each entitled to equal shares of their combined value (equalization), common-law spouses are not obligated to split their property on separation unless it is jointly owned. Now, this is just a very brief look at the similarities and differences between how the law treats married versus common-law spouses in Canada, and you should be aware of how the effect of a common-law relationship status varies from province to province.
What is a Cohabitation Agreement?
So, with this understanding that couples who live together or ‘cohabitate’, also have their own responsibilities/obligations/entitlements in the eyes of the law – should they meet the criteria of a ‘Common-Law’ relationship, we can see why some people may want to sign a Cohabitation Agreement before moving in together.
Like a Marriage Contract (a.k.a. Prenuptial Agreement), a Cohabitation Agreement is a way to set out your partner’s entitlements and/or release of a claim to your property or assets. This domestic contract is typically signed before or at the beginning of a couple’s cohabitation, but can be signed at any point throughout a relationship. Being considered a common-law relationship (having cohabitated with each other continuously for one year) is not required before entering into a Cohabitation Agreement but can ensure that you and your partner are on the same page before ‘Common-Law’ status applies. Preparing and signing a Cohabitation Agreement could benefit you whether you’re someone bringing valuable property and assets into a relationship, or whether you’re someone who’s concerned with unequal division of property on separation from your unmarried spouse.
If you’re in an unmarried or common-law relationship and considering combining finances, moving in together, or purchasing any property together, you’ll want to consider the benefit of signing a Cohabitation Agreement which can help bring you peace of mind throughout your relationship and save you significant costs later on.
Our Family Law team is experienced in the preparation of various domestic contracts, including Cohabitation Agreements, and would be happy to speak with you today about what to consider.
More information? We’re here to help – [email protected] This WARDS LAWYERS PC publication is for general information only. It is not legal advice, nor is it intended to be. Specific or more information may be necessary before advice could be provided for your particular circumstances.
