In today’s world, more and more couples are living together without getting married. Although this can be a joyful experience for everyone involved, it’s still important to think about your financial and personal interests before you decide to move in together. A cohabitation agreement is a legal document that establishes clear expectations for financial contributions, asset division, and other important aspects of a relationship when a couple is unmarried. They serve to ensure peace of mind for both parties by helping unmarried couples avoid legal uncertainty and financial disputes if their relationship ends.
If you’re considering living with your partner, speaking to an Edmonton family lawyer can be extremely beneficial. At Verhaeghe Law, our family law lawyers can help you draft a cohabitation agreement tailored to you and your partner’s needs. Contact our team today for legal advice.
What is a Cohabitation Agreement?
A cohabitation agreement is a legal document that outlines the rights and responsibilities of partners when they decide to live together. In Alberta, common law partners are also referred to as Adult Interdependent Partners (AIP). They are legally recognized when:
- The two individuals have lived together for three (3) or more years, or;
- The two individuals have lived together with some degree of permanence (at no set period of time) and have a child together
Adult Interdependent Partners or other couples who live together are entitled to draft a cohabitation agreement as soon as they choose to reside at the same residence. It is meant to cover various aspects of the relationship, including:
- Financial Contributions: For example, how household expenses will be divided or how bills will be paid.
- Asset Division: If the relationship ends, a cohabitation agreement can outline property ownership (current and future) and how it is to be divided.
- Debt Management: Allocation of shared and personal debts acquired before or during the relationship.
- Spousal Support: You can outline terms for financial support after separation should the relationship end.
- And More
It is important to note that laws governing common law partnerships differ across provinces, which may affect how you choose to lay out your cohabitation agreement. In Alberta, common law couples have similar rights to married couples under certain circumstances, but seeking legal guidance is still essential. This is to ensure that any legal agreements you craft comply with local laws and are enforceable should you need to use them. If you require help crafting a legally sound cohabitation agreement, you can speak to our Edmonton common law lawyers today.
When Should You Consider a Cohabitation Agreement?
Cohabitation agreements can be useful for a wide variety of couples, whether you’re in a new relationship, moving in together for the first time, or have already been living together as common-law partners.Â
Cohabitation agreements may be particularly relevant for:
- Significant Financial Disparities: If you or your partner has significantly more wealth than the other, you can include protections for financial assets or other property. This can help guard against potential unjust enrichment claims in the future.
- Business Ownership: This will ensure that, if one partner owns a business, it remains unaffected by personal disputes during or after the relationship.
- Purchasing a Home Together: Cohabitation agreement provisions can prevent unequal contributions to the down payment or mortgage from taking place.
- Second Relationships or Blended Families: A cohabitation agreement can address estate planning concerns for partners who have children from previous relationships, as legal matters may become more complex when families blend.
The main appeal of cohabitation agreements, regardless of your needs as partners, is that they are legally recognized and upheld by courts. This means you will have a legally enforceable framework available to help you resolve disputes quickly and protect your interests should you ever need one.
10 Benefits of a Cohabitation Agreement in Alberta
When you decide to live with a partner, a cohabitation agreement can be an invaluable tool for protecting your property and interests. Although many people might view legally binding agreements as harmful or unneeded when they’re in a serious relationship, cohabitation agreements can actually encourage greater trust and transparency.
When you create a cohabitation agreement with your partner, you can:
1. Protect Your Individual Assets
A cohabitation agreement can be used to protect your and your partner’s individual property when you decide to live together. Similar to a prenuptial agreement or marriage contract for married couples, a cohabitation agreement will clearly outline who owns what at the start of the relationship and how these assets will be divided if you decide to separate. This can help you avoid future disputes over property or other valuables, saving you time, money, and stress.Â
For example, if one partner owns a home at the beginning of the relationship, your cohabitation agreement can specify whether the other party has any ownership rights. Depending on the preferences of you and your partner, you can decide to share property, keep it completely separate, or make certain concessions should you decide to break up.
2. Secure Financial Contributions
A cohabitation agreement can stipulate how important expenses or financial commitments are distributed between partners, such as:
- Mortgage payments
- Rent
- Utilities
- Household maintenance purchases
- And more
By having a clear outline of how each party is expected to contribute financially to the relationship, you can help prevent misunderstandings or disagreements from arising.
3. Manage Your Debts
If you decide to draft a cohabitation agreement, you can indicate who is responsible for specific debts, such as:
- Credit card debts
- Student loans
- Personal loans
- Mortgages
- Business obligations
- And more
The rules you set can address debts incurred both before and after your relationship started. This way, you can ensure that one partner is not unfairly burdened by the other’s financial liabilities.
4. Protect Your Business Interests
If you or your partner own a business or part of a business, your cohabitation agreement can ensure that the other party does not inadvertently gain ownership or other rights. This type of provision can apply while you are living together or if you decide to separate.
5. Reduce Stress and Conflict
When you create a cohabitation agreement, you are establishing clear expectations for both partners to follow. Not only is this a generally good idea for two individuals living together for the first time, but it can also help you and your partner avoid unnecessary conflict. When you agree to draft the agreement, you are encouraging open communication about finances and other critical issues in your relationship.
6. Simplify How You Separate
Cohabitation agreements are meant to provide a clear roadmap for how you and your partner will handle things like property division, spousal support, and other matters if the relationship ends. Although Alberta law sometimes automatically requires common law partners to divide their property under certain circumstances, a cohabitation agreement allows you to decide how this will take place in a legally enforceable manner.Â
If your split is not amicable or you have not agreed on terms before you separate, you may need to engage in stressful court battles or litigation. A cohabitation agreement with preset expectations for your separation can save both partners time and money.
7. Protect Dependent Partners
Sometimes when couples live together or become common law, one partner might sacrifice certain career opportunities or income to support the relationship. With a cohabitation agreement, you can ensure financial security for the partner who was dependent during the relationship if you decide to separate.
Your agreement can address spousal support expectations. This type of provision might be especially important for partners who are raising children together, sharing certain expenses, or managing household duties.
8. Estate Planning and Inheritance
Although Adult Interdependent Partners do have certain legal rights in Alberta, sometimes they are not as clear as those of married couples. A cohabitation agreement can also protect the rights of partners when it comes to estate matters, ensuring they are not left out in the event of a partner’s death. In your agreement, you are entitled to address the minimum requirements for:
- Wills
- Living arrangements
- Inheritance rights
- And more
9. Address Residency and Tax Issues
When you and your partner are not legally married, complications may arise regarding property ownership and tax liabilities. This is especially true for non-Canadian residents or couples who periodically live in different countries.
A cohabitation agreement and its provisions pertaining to property division will ensure that you and your partner are compliant with Canadian tax laws for common law partnerships.
10. Tailor Your Agreement to Your Unique Circumstances
The advantage of cohabitation agreements is that each will look different depending on the needs of the partners involved. In this way, you can add or subtract any expectations from your agreement that you deem necessary. For example, you might create customized provisions in your agreement for:
- Digital asset management (e.g., cryptocurrency)
- Childcare arrangements
- Support for life changes, like illness or relocation
- And more
Are You Thinking About Creating a Cohabitation Agreement? Contact Our Edmonton Family Lawyers Today to Get Started
Cohabitation agreements offer numerous benefits, from protecting your assets to simplifying the separation process for you and your partner. Whether you’re living together for the first time or entering a new relationship with significant assets, a well-drafted agreement can provide you with clarity and peace of mind. If you’re considering crafting a cohabitation agreement, contact Verhaeghe Law’s experienced family lawyers in Edmonton to discuss your options and get dedicated legal advice.