What is a cohabitation agreement?
A cohabitation agreement is in some ways similar to a prenuptial agreement. It is an agreement put in place by a couple – heterosexual or same-sex – who have chosen to live together but not get married.
As with a prenuptial agreement, a cohabitation agreement is a legal document that details mutually agreed upon decisions regarding such things as spousal support and allocation of assets should the relationship end.
Who needs a cohabitation agreement?
If you live with your partner, but do not have an agreement defining each other’s rights and obligations, you should consider getting one. Unfortunately, most cohabiting unmarried couples do not. It will help protect the best interests of each person in the relationship should you decide to separate. You may be viewed as complete strangers in the eyes of the law should you separate or if one of you passes away, so it is critically important to put an agreement in place so that you and your partner have control over what happens with your assets, debts, and any children in the event that your relationship ends.
Relationships and circumstances change as time passes.
You may feel that neither one of you is obligated to support the other, should the relationship end. However, over the years and as your relationship evolves, this may change. Assets such as real estate may increase, you may have a child, or one of you may lose your job. Having a cohabitation agreement in place at the beginning of your relationship will significantly decrease the amount of turmoil and frustration involved in the division of assets should your relationship end.
A cohabitation agreement has many benefits.
In addition to simplifying the distribution of assets should your common-law relationship end, a cohabitation agreement will also preempt what could be undesirable rulings in terms of asset allocation. That is to say, you are better off making a plan that you and your partner agree on when you begin cohabitating as opposed to waiting for the courts to decide your fate should your relationship end.
Over the years, you and your common-law partner may have unspoken agreements that act as an understanding between the parties that one party would support the other, or that one party is obligated to do a certain task. You may not realize that a court will often force you to live up to your end of this verbal agreement in much the same way that they would if it were a written agreement. A written agreement will, therefore, ensure that there are no misunderstandings regarding both parties’ wishes so that if your relationship does end, you do not rely on a verbal agreement that may be interpreted or remembered differently by each party.
When should a cohabitation agreement be drawn up?
Generally, the sooner you draw up your cohabitation agreement, the better. Ideally, it should be completed before you and your partner begin living together as there is no minimum period of time you need to have been living together before creating the document.
Discussing the relevant topics – expectations regarding financial matters, what happens to any real estate or children should your relationship end, etc. – will help avoid misunderstandings or the potential for conflict at the beginning of your living together.
In my experience, couples will often find that they had vastly different understandings of what the agreements would be, so it’s great to get these issues out in the open as early in the relationship as possible.