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Cohabitation Agreements: Do You Need Them and How to Make One

In certain situations, the Canadian government may consider your relationship to be more than a simple relationship. In Ontario, living together for three years means that your relationship is a common-law marriage.


If you are not formally married, there are many benefits to having cohabitation agreements. Below, we'll explore how to make a cohabitation agreement and the benefits of the contractual agreements.


What Is a Cohabitation Agreement?

Many clients come to Baker Doodnauth wondering, how do cohabitation agreements work? A cohabitation agreement is sometimes referred to as a common law contract.


The document protects both spouses' legal rights and lays out certain obligations. The agreements clarify how partners should divide property if a relationship ends.


The agreements formalize promises that both partners make to one another. The contracts are typically made early on in a relationship. Lawyers can also draft the documents at the end of a relationship (separation agreement).



How to Make Cohabitation Agreements

A cohabitation agreement is a legally binding agreement. For this reason, couples should not draft these contracts without professional legal help. Our lawyers, Charles Baker and William Doodnauth are experienced in drafting contractual contracts, and they will guide you through the process.


With the help of one of our lawyers, you and your partner will decide what the agreement will cover. Common cohabitation topics include:

  • Pensions

  • Inheritances

  • Investments

  • Spousal support

  • Property division

  • Asset division

  • Debts

  • Jointly purchased assets

  • Current and future properties

Both partners will need to disclose details about finances and other topics. Transparency and thoroughness are key.


Based on your goals and disclosures, one of our lawyers will draft the cohabitation agreement for your review. In some cases, a lawyer may advise that each partner seek independent legal counsel. Once both parties sign the document, the contract is legally binding.


Top Reasons for Signing Cohabitation Agreements

Now that you know what a cohabitation agreement is, you may be wondering, if you should make a cohabitation agreement. There are several common reasons why signing this type of document may be a good idea for you and your partner.


Establish Enforceable Divisions of Property

Common-law marriages do not govern the division of property. Rather, the agreements assume each party keeps whatever is already in his or her name. In certain relationships, there may be a great disparity in wealth between partners.


To ensure the equitable division of properties following a separation, a cohabitation agreement may need to be signed. This can prevent the need for costly and time-consuming court battles. You can even mimic marriage laws when deciding how to draft your cohabitation agreements.


To Deal with Spousal Support

Common-law marriages can require spousal support under certain conditions. The aim of spousal support is to protect one spouse from unfair financial circumstances following a separation. If your goal was to avoid spousal support, you will need to outline those goals through a cohabitation agreement.


Inheritance of Property

Common-law marriage does not automatically allow for inheritance. If your spouse dies, you do not automatically inherit his or her estate. To allow one partner to continue living in their home following the death of a spouse, certain provisions for inheritance should be established through a cohabitation agreement.


To Protect the Assets of One Spouse

If one spouse is significantly wealthier than the other, a cohabitation agreement can protect that individual's wealth. Without such an agreement, a court may intervene and require the wealthier party to relinquish much of his or her wealth.


You Were Previously Married

If you were previously married, you might come into your new common-law relationship with unique goals and concerns. You may have child support obligations, or you may own significant assets like a home.


A cohabitation agreement can add protections for members of your first marriage. Ensuring that your assets are transferred to your children in the event of a death is one example of why you may need a cohabitation agreement.


To Reduce Stress

Breakups are stressful enough. Having a legal framework for how assets will be divided can make that process less stressful. Having a cohabitation agreement in place can also provide couples with peace of mind.


To Protect a Business

In the event of a breakup, one partner may end up owning part of your business. Your business partners may not be happy about that. Having a legal agreement that outlines who retains ownership over a business can prevent you from inheriting an unwanted business partner.


To Outline How a New Home's Assets Will Be Divided

Are you planning on buying a home? Even when a home is purchased for both partners to co-own, one partner may contribute more assets than the other. Even if one partner pays for the entire down payment, a breakup could lead to the house being sold and the assets being divided 50-50.


To ensure that investments in the home are fairly divided in the event of an ended relationship, both parties should consider signing a cohabitation agreement.


Take Out the Guesswork By Signing a Cohabitation Agreement

Cohabitation agreements should be part of any long-term relationship or domestic partnership. The agreements outline assets divisions. They also describe how to handle obligations following the end of a relationship.


Do you have further questions about these important legal agreements? Our family lawyers in the Newmarket can provide you with honest legal advice.


To schedule a meeting, please contact the family law team at Baker Doodnauth today by calling 905.895.8184.




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