Information About Cohabitation Agreements
In Ontario, couples, particularly young working professionals, are getting married later and later in life. By 2016, the average age was 30 years for women and 32 years for men for a first marriage in Canada. At the same time, people are living longer, well into their 80s, according to Stats Canada. They may have married one (or more) times or experienced the death of a partner. So, people in their 50s, 60s, and even 70s are finding partners later in life after having raised children into adulthood and having accumulated assets along the way. Many decide not to marry again.
In Ontario, the law allows unmarried partners who are living together to enter into a form of contract generally known as a Domestic Contract. These agreements are specifically called “Cohabitation Agreements” if the partners do not marry. They are called “Marriage Contracts” [or “Pre-nups” in the United States] if the partners plan to marry in the near future. It is important to note that a Cohabitation Agreement will turn into a Marriage Contract, and continue to be valid, if the partners marry in the future unless the couple specifically state that they do not wish this to occur as a term [condition] of the Cohabitation Agreement. Click on our Marriage Contracts Section, to learn more.
Cohabitation Agreements are a great way for the young and young-at-heart to spell out the rights and obligations of each partner during their cohabitation.
It even allows them to determine in advance how matters will be settled between them should their relationship end, they stop living together or in the event of the death of either partner.
At Williams Family Lawyers, we have helped couples of all ages, financial means and sexual orientations in the negotiation, drafting, and enforcement of Cohabitation Agreements throughout the Greater Toronto Area.
Contact Us to help you with a cohabitation agreement that will protect your income, assets, and your children.
Cohabitation Agreements versus Living Common-Law
A couple becomes common law for family law purposes only if they have lived together in a relationship for three or more continuous years or immediately if they are the biological parents or parents of adopted children and have been in a relationship of permanence. A Cohabitation Agreement can provide for or exclude rights that a party would or would not be entitled to if the couple is merely living common law (and without a Cohabitation Agreement in place). As well, the couple can determine if and when those rights or exclusions will commence and end.
Cohabitation Agreements and High Net Worth Individuals – You’ve Worked Hard to be Where You Are, We Can Protect You
On relationship breakdown, for instance, common law partners keep what each of them have brought into the relationship or what is registered to their names. Unlike married couples, common law couples are not entitled to seek equalization of net family property if the relationship ends. However, that does not prevent either of them from making a claim for a resulting or constructive trust on property that is owned solely by the other. (For example, your partner owns the house and you contributed money to a major renovation.) While these claims are difficult to succeed on, the evidence must be very detailed and it can be costly and time-consuming to litigate on them.
Similar to married people, common law couples also have an obligation to support themselves as well as a right to claim support from the other partner. Therefore, when one partner in the couple depends on the other for his or her financial support and the other has the ability to pay spousal support (also referred to as alimony), the Court may order that the payor pays spousal support to the recipient spouse for a specified period or an unlimited period of time which will likely depend on the length or the partners’ cohabitation.
High-net-worth individuals (HNW) who have significant assets (for example: a home, cottage, one or more investment properties, an executive pension, inherited family wealth, or a lucrative business) may intend to protect those assets to provide for their own retirement and comfort. They may also intend to leave those assets to their adult children, grandchildren, and their favourite charities and social causes upon their death and therefore, may want to keep those arrangements in place.
High-net-worth individuals may already have support obligations to children or a spouse from a prior marriage or relationship which they are already bound to. They may use a Cohabitation Agreement in a subsequent relationship to ensure that they are not paying support to multiple children and partners at the same time.
Cohabitation Agreements allow couples to be bound by their own contracts, including but not limited to whether they will have any rights to share in the other’s property, whether and for how long they may remain living in property that is solely owned by the other, any support obligations to each other either during their or after their cohabitation, how the household or other bills will be paid during their cohabitation, or any entitlement to share in the other’s estate or to receive support upon the death of the other. Essentially, Cohabitation Agreements allow couples to “contract out” of the rights and obligations that the law would otherwise impose between them.
At Williams Family Lawyers, we have worked with several HNW Ontarians to ensure that their assets are protected when they enter into new relationships after divorce or the death of a previous spouse.
Cohabitation Agreements to Coincide with Wills or Powers of Attorneys
It is important to note that unlike intestacy rights and rights to claim for a part of a deceased estate for married spouses, no similar right exists for unmarried or common law couples. Therefore, one cannot merely rely on a promise made by his or her common law partner that he or she will receive an inheritance from the estate or the other partner as the partner can change his or her Will as he or she sees fit. A Cohabitation Agreement can provide for the terms of an inheritance to a common law partner. It can provide for rights for the surviving partner to remain living in the home that they resided in or to continue to use property held in the name of the deceased after his or her death. It can also provide for or restrict any rights that a common law partner may have to receive dependency support from the estate or the deceased partner. In the event that the deceased partner’s Will had a conflict with the Cohabitation Agreement, the terms of the Cohabitation Agreement would prevail in Court.
At Williams Family Lawyers, we have worked with real estate lawyers and estate lawyers to ensure that the terms of partners’, particularly elderly partners’, Wills and Cohabitation Agreement reflect their intentions so that there are no surprises upon the death of one of the partners.
Are Cohabitation Agreements Legally Binding?
By having a Cohabitation Agreement in place, if the couple decides to no longer live together, separating is easier and cheaper because they have already dealt with the terms (who keeps what) in the Cohabitation Agreement. Essentially, they have pre-negotiated what would be their “Separation Agreement” in advance and at a time when they are not in conflict. Negotiating with a partner when you are not in conflict is much easier and provides both partners with peace of mind should the relationship end.
Once signed and witnessed, a Cohabitation Agreement tends to be upheld by Courts, provided that crucial elements have been covered prior to it being signed. A critical part of negotiating a successful and legally binding Cohabitation Agreement is financial disclosure. Both partners need to provide documentary disclosure which, depending on the terms of the Cohabitation Agreement, could be of their assets and liabilities and their income. Incomplete financial disclosure—purposefully or inadvertently hiding assets—could be grounds for a Cohabitation Agreement being “set aside,” meaning it will not be upheld by the Courts at a later date. At Williams Family Lawyers, we only take cases for Cohabitation Agreements if the parties are willing to make full and frank disclosure to the other. We want to ensure that our clients have all necessary information available to them so that they may make an informed decision.
In addition, while it is not mandatory for both parties to have a lawyer to negotiate the terms of the Cohabitation Agreement and to provide them with independent legal advice (ILA), if they chose to retain a lawyer, both will need separate lawyers to represent their respective interests. Having the same lawyer represent both parties as part of negotiating the Cohabitation Agreement is deemed to be a conflict of interest for a lawyer.
If you would like to enforce the Cohabitation Agreement for any reason [i.e. your partner broke one or more of the clauses in the contract that you both agreed on initially], you can file the Cohabitation Agreement with the court and seek an Order to have the contract enforced. If it is necessary to change a term [condition] of the Cohabitation Agreement or to set it aside and this is not agreed to by your partner, then the party who seeks the change will have to bring a Motion to Change a Final Order or Agreement to the Court.
We at Williams Family Lawyers have negotiated Cohabitation Agreements in new relationships following death or divorce and also for same-sex unions. We can help you negotiate your agreement as well and protect your interests in the long-term.
Contact Us about your Cohabitation Agreement.
What Cohabitation Agreements Cannot Do?
When couples have been living common-law and have been raising children from one of the partner’s prior relationship, but the non-biological partner acts as a parent to those children, that partner may have child support obligations to those children when the relationship ends. The Latin phrase in loco parentis, meaning “in the place of a parent,” is used to describe this parental relationship. As child support is the right or the child, the partners cannot “opt out” or child support obligations in a Cohabitation Agreement.
A Cohabitation Agreement also cannot stipulate in advance which spouse will get custody of or access to any children if you and your partner become biological or adoptive parents or if one partner acts in loco parentis to a child or the other partner.