Should You Make a DIY Cohabitation Agreement?
Did you know that you can be a “spouse” even if you are not married? In BC, an unmarried couple who live together in a marriage-like relationship for at least two years are considered common law spouses. It does not matter if you and your partner are not legally married and never plan on getting married.
Here is another fact that may surprise you: common law spouses are treated the same as married spouses when their relationship ends. Each spouse is entitled to a half interest in all “family property” on separation. The entitlement to property division arises automatically when spouses separate whether the couple were common-law spouses or legally married. A common-law spouse can also make a claim for spousal support just as a married spouse can.
You can not avoid a property claim or spousal support claim simply by choosing not to marry. The good news is that you can avoid disputes by making a cohabitation agreement. A cohabitation agreement allows you and your partner to opt out of the property and spousal support rules that would otherwise apply. In BC, cohabitation agreements are very common but there is nothing commonplace about the legal knowledge you need to make an agreement that is clear and legally enforceable. Below you will find some information and reasons why you should consider having a professional family law lawyer draft your cohabitation agreement.
What is a cohabitation agreement?
A cohabitation agreement is a written agreement used by an unmarried couple to protect your legal rights, to set out the responsibilities of both parties and to bring certainty to your financial and legal relationship. An agreement can apply to issues that may arise during the relationship and to issues that will most certainly arise if the relationship ends. A properly drafted cohabitation agreement can deal with all kinds of issues, including:
- How will you and your partner share living expenses such as the rent, the mortgage payments, the utilities and other household bills?
- Will you keep your bank accounts separate or open joint bank accounts or a combination of both?
- Will you have joint credit cards or lines of credit? Or will you keep your debts and liabilities separate?
- Who will be responsible for the care of children which either or both of you brought into the relationship? Will you as the non-biological parent be financially responsible for these children if the relationship ends?
- What assets and/or debts are each of you bringing into the relationship? And what are the balances and values of these assets or debts?
- If you separate, how will you divide real estate, bank accounts, registered accounts, Tax Free Savings accounts, pensions, business assets and any inheritances you may have received during the relationship? Will these assets be kept separate? If not, is there a process within the body of the agreement for determining how the assets will be valued and a formula for determining how each asset will be divided?
- Will either of you be entitled to claim spousal support if the relationship ends?
An example of when a cohabitation agreement can be useful often occurs if you move into a home owned by your partner. You have no ownership of the home as it is not legally registered in your name. However, you may be contributing to the mortgage and to the household bills and you may maintain and improve the home thorough your own hard work and manual labour when it comes to renovations. If your relationship end, and you are not on the title to the property, you will have to go to court to advance your case for an interest in the property if your former spouse does not agree. However, if you had signed and legally binding cohabitation agreement that sets out how your interest in the asset would be determined, you would not have to start a court action and your would not need to appear at a trial before a Judge to determine your entitlement to the property in dispute.
Why you should avoid using a cohabitation agreement template
BC family law is complex. Cohabitation agreements can be complicated and there are processes that must be followed to make a cohabitation agreement that is valid and binding. You must ensure there is full financial disclosure. It is also important that the agreement is properly witnessed. The purpose of the agreement is to protect you and to make the financial unravelling of your relationship more certain. It is always better to get legal advice so that your cohabitation agreement is tailored to your unique personal situation and that it addresses your unique concerns.
A DIY cohabitation agreement may not be worth the paper its written on when you need it most to protect you during separation. If the validity of the agreement is challenged by your ex-spouse, the BC courts will determine if all or part of a cohabitation agreement is of any force and effect. If this occurs, you will be left to negotiate the family law issues with your ex-spouse at a time when you may no longer be on good terms.
So, can you write your own cohabitation agreement or not?
Yes, you can. Examples of situations where writing your own may make sense are if you are both young, both have no significant assets and no significant debt, and do not have any children. If you decide to use a do-it-yourself approach, you and your partner should still each obtain independent legal advice from a family lawyer before signing the cohabitation agreement.
When each of you gets independent legal advice from your own family law lawyer before signing, it will make it less likely for either of you down the road to be able to argue that you did not understand the nature or consequence of the cohabitation agreement.
How much do cohabitation agreements cost?
The cost of a cohabitation agreement depends on the issues you want to be address and the time it takes to draft the agreement. At Valerie M. Little Law Corporation, each agreement is thoughtfully and carefully prepared to address each client’s individual needs . DIY kits may be relatively less expensive than one prepared by a lawyer but the DIY version may cost you significantly more in the long run if ends up being challenged by your ex-spouse and later set aside by the Judge.
Contact our cohabitation agreement lawyer to schedule your own individual consultation to determine if a cohabitation agreement is right for you.