A Common Law Fairytale, Do I Really Need a Cohabitation Agreement?

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A Common Law Fairytale, Do I Really Need a Cohabitation Agreement?

Once upon a time, there was a princess and prince who fell madly in love. They couldn’t imagine their lives without each other. They weren’t ready to get married yet , so they decided to try out the future together by moving in together. What could be the harm? With starts in their eyes, they moved in together without a second thought. They bought things together, shared their money, shared common hopes and dreams, and built a life together. Happily ever after.

If only life were that easy, huh? And maybe for some of us – it is.

But looking at the divorce and separation statistics, it is likely that we will have multiple long term romantic relationships over the course of our life span – some resulting in cohabitation and others in marriage. Rarely, do we fully understand the legal implications of these relationships, until sometimes it’s simply too late. I’ve often joked that there should be a mandatory course that couples are required to take before they shack up or get married. And maybe some sort of insurance? I mean, we have vehicle insurance “just in case” we get into an accident and hurt someone, home insurance for “just in case” our house burns down, and life insurance for when we die. What we really need is relationship insurance – for “just in case” our relationship doesn’t make it to happily ever after. For probably the most important and intimate aspect of our life – we have absolutely nothing to fall back on “just in case”. But I digress.

So often, the first sobering reality of the legal implications of entering into a new relationship is the consultation that the individual has with a lawyer around the time that they start to consider separating, or in the weeks after their partner tells them it’s over. Usually, they have some ideas of what the legal implications are of their separation – and the issues they will need to resolve – but rarely do they have anything close to the full picture. Often, they have listened to advice from friends and family or just let themselves loose on google – reviewing information and case law from all over the world, which doesn’t necessarily apply to them here.

Now, while I know that the audience for this article is not likely to be the prince or princess who is madly in love – they can barely tear themselves apart to see clearly what they are getting into. But for those of us around the prince and princess – we can direct them to this information and hopefully they will at least give it some consideration before jumping in blindly.

Believe it or not, although I am a divorce lawyer, I am not as cynical about love and relationships as you may think! I would much rather see a couple stay together than see them in my office after things have fallen apart. One of the primary considerations that a new couple should consider is their views about money.

Money is one of the primary reasons that parties cite as their reason for separation.

So, it seems appropriate that making a plan before moving in together about how the expenses in the household will be handled is probably a good idea. Will you pool your money together? Will you each have separate accounts and share a single joint account? Or will you each be responsible for a particular bill? These are all discussions that should be had at the outset of every cohabitation. Hopefully if you have this discussion, and plan together, you will live happily ever after and will never need me.

Understanding, however, that there can be legal implications based on how you deal with your money. By pooling your money into one account, you are creating to some extent a relationship of interdependence. Perhaps through the lens of your separation, it could appear to the outside world or a Judge, that you intended to share everything you had with this other person?. It could also result in a determination by a Court that you should be on the hook for partner support if the relationship ends.

When do you become common law?

This is a question I get a lot. Some people think there is a magic mark – 6 months or a year that makes you “common law”, and that somehow that has some specific implications in the law. The reality, as with most things in the law, is that it depends on what you’re talking about. If you live together in a relationship of interdependence (this has a very specific legal definition) for three years or more, you may potentially have support obligations to each other. If you have children together while living together, the potential support obligations could exist the moment that child came into the picture – no matter how long you lived together.

Was that your intention at the time you had the child?

Did you even consider it at the time? From the standpoint of dividing property, what’s yours is yours and what’s mine is mine, right? Not always true. There is no magic timeframe, which could give your partner rights to your hard earned property. The question in a common law situation is more about the nature of each of your contributions to the property – whether monetarily or otherwise – regardless of whose name is actually on title and the intentions of the parties. Division of property of common law parties is one of the least predictable areas of the law in Alberta. There is actually no legislation that gives us rules to follow which leaves us to follow cases in determining the right outcome – and let me tell you folks – the cases are all over the map.

What happens if one of you dies while cohabiting?

This can be really tricky. There are all kinds of rights that may construe to your common law partner in the event of your death. Maybe they have an entitlement to some of your property, maybe the estate has to pay them support. And no – a will doesn’t necessarily resolve this issue either. This can be even further complicated if there are prior “spouses” with which to contend.

What if your partner has children from another relationship?

This one is often a huge eye opener. If the kids aren’t yours, you might think that you are completely exempt from child support in the event of separation, right? Nope. If you “stand in a place” of a parent to a child that it is not yours, and have contributed to their support directly or indirectly over the duration of the relationship, you could be required to pay child support for those children after a separation.

If you decide to have children together, or “oops” she gets pregnant, and then she decides to quit her great job to be a stay at home mom for a few years – this could also have implications on partner support obligations after separation.

Have I thoroughly terrified you? I hope not. Because love is still a beautiful thing and I wouldn’t discourage you from following your heart. I just hope that you use your brain at the same time, and give some real consideration to the magnitude of deciding to share your life with another person. And understand that there are a whole different set of rules that may apply should you get married.

The solution to all of this is to sit down with a lawyer before you sign that lease together. At a minimum, get an understanding of what you’re getting into legally. Most times, after that initial discussion, you will likely want to enter into a cohabitation agreement or prenuptial agreement that allows you both to outline your intentions for the relationship and to essentially override the law by predetermining what will happen in the event of your separation or death. That agreement can also become a roadmap for your relationship. The process of making one forces you to consider the realities of the future and forces you to really communicate with your partner and to see if you are truly on the same page about your lives together and your mutual expectations and desires. Now, to be clear, there are probably some rights that you can’t contract out of – child support is one of them. But that being said, having something on paper is always better than going in blind.

And further to my last blog post, “Do I really need a lawyer”? to do a prenup or a cohab – the answer is yes.

The exercise of doing one with your spouse around kitchen table is probably a good one in any event, however that document is not going to be legally binding years later, which means a court could overturn it. In order for the agreement to be legally binding, both parties need to have independent legal advice and there should be an exchange of at least some extent of financial information before signing one. And no – independent legal advice is not the equivalent of a notary – one of you will need to have a lawyer prepare the agreement, and then you will each attend before your own lawyers individually to obtain legal advice before signing it.

If your answer to me is – that sounds expensive – the question I always ask – is can you afford not to? Typically, this sort of agreement may start at $1500 – $2000 depending on its complexity and the value of the assets involved. Fast forward to the end of your relationship, the dollars potentially saved from an unexpected and often unintentional property settlement or support payments, will most usually far exceed the cost of the agreement. This is as close to relationship insurance as it gets, folks. Look at the cost of the agreement as the relationship insurance premium.

Now, this agreement won’t definitely guarantee the “happily ever after” for which we are all hoping. You will still have to do the hard work of fostering a healthy and positive relationship with your spouse, but this agreement will serve as the framework of your lives together.


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