Do I need a Cohabitation Agreement?
Living common-law with a long-term partner, as opposed to getting legally married, is becoming more prevalent amongst Canadian couples.
This raises the question of when it is appropriate to create a cohabitation agreement with your partner.
What is a cohabitation agreement?
A cohabitation agreement is a legal document, similar to a prenuptial agreement, used in common-law relationships to set out the rights and obligations of the parties. Cohabitation agreements can also address how assets and debts are divided in the event of a breakup, and may also deal with spousal support.
In Alberta, common-law partners are legally referred to as “Adult Interdependent Partners” (“AIPs”) and are defined within the Adult Interdependent Relationships Act. To be an AIP according to the Act you must have lived in a “relationship of interdependence” for no less than 3 continuous years OR share a child with your partner.
“Relationship of interdependence” means where the parties: share one another’s lives, are emotionally committed to one another, and function as an economic and domestic unit.
Who should have a cohabitation agreement?
There is no legal requirement to have a cohabitation agreement in place. However, if you and your partner are planning on living together or sharing assets, property, and household duties for more than 3 years, OR have or are planning for a child, then you meet the definition of an Adult Interdependent Partner and drafting a cohabitation agreement may be in your best interest in order to avoid the potential of a property claim against your assets down the line.
The primary purpose of a cohabitation agreement is to offer yourself and your partner peace of mind, considering your lives are now intertwined. A legally binding cohabitation agreement is the best way to avoid a contentious court battle after a breakup.
In summary, partners in the following situations might want to consider a cohabitation agreement:
- You are property owners (with title held either individually or jointly)
- You have accumulated a significant number of assets
- You own a business
- You own a farm and/or have an interest in a family farm that you want to protect
- You are contributing to a pension while living together or
- You have lived together for only a short period of time but have children.
How to make a cohabitation agreement?
Where property is addressed in a cohabitation agreement, it must comply with section 38 of Alberta’s Family Property Act to be legally enforceable. This means that:
- Both parties must be aware of the nature and effect of the agreement;
- Both parties must be aware of any possible future claims to the property they may have under the Family Property Act, and that they are giving up those claims to the extent necessary to comply with the agreement; and
- Both parties must execute the agreement freely and voluntarily without any compulsion from the other party.
Each party must meet with a lawyer independently to acknowledge, in writing, their understanding and consent.
You can include almost anything in a cohabitation agreement as long as it’s legal. Most commonly, the following items are included:
- The division of shared assets/property, including pets
- Which property is excluded from the division
- The division of debts
- The payment of expenses during the relationship and
- The payment of spousal support
While some cohabitation agreements include provisions for parenting of children and decision-making responsibilities for the education/upbringing of the children, these provisions may not be enforceable in Alberta unless they can be shown to be in the best interests of the children.
If you are considering a cohabitation agreement, and require legal advice or help to draft the agreement, book a consultation with an experienced family lawyer at Vogel LLP.