What to include in a Cohabitation Agreement can seem daunting at first. It can also be tricky to bring up the need for a cohabitation agreement with your partner. It is an exciting time to share your life, but before you hire a moving truck and unpack, consider getting a cohabitation agreement first.
Why Do You Need a Cohabitation Agreement?
A cohabitation agreement allows both partners to take an inventory of assets and debts, and to decide how these will be shared or divided if you break up. For example:
- One person owns a condo or house before they got into the relationship, and wants to retain that asset.
- One of the parties has significant credit card or student loan debt, and the other does not want to assume responsibility for that debt.
- One of the parties has a work pension and does not want to share it if the relationship ends.
A cohabitation also outlines plans and expectations for how to share expenses in the future. For example:
- Whether or not you will share bank accounts or keep them separate.
- How you will divide household expenses, such as rent or mortgage payments.
- The terms for spousal support (“alimony”) if the relationship ends.
- If, and how, to split a pension, if the relationship ends.
A Cohabitation Agreement can also have terms to contemplate your potential marriage in the future. Most people think of these as “prenuptial agreements”.
Why Do I Need a Lawyer?
Having a lawyer draft your cohabitation agreement ensures that you have included everything in your agreement, and that your rights are protected.
Lawyers are trained to draft documents for court, so they are able to write up your agreement in a way that is clear, concise, and reliable.
Having a cohabitation agreement in advance is a more certain way of determining the financial implications if you break up.
If you have a bad break-up, and end up in court, you can rely upon your cohabitation agreement to set the terms of your property division.*
What Kinds of Things Do I Include?
Your lawyer will need the following things to write up your cohabitation agreement:
- Vehicle(s) owned by each person (Make, model, year, estimated value, VIN number).
- Real estate owned by each person (address, year purchased, latest property tax statement).
- RRSPs, RESPs and/or other investments (bank/institution, number, balance).
- Any specialized property owned by each of the parties, of significant value (art, jewelry, collections, recreational vehicles, etc.).
- Major gifts from extended family (for example, down payment on home)
- Mortgage information on real property (Bank/institution, mortgage balance).
- Credit cards and Lines of Credit (Bank, account, balance).
- Student loan debts and payment schedules.
- Debts owed to family or friends for loans (for example, loan for down payment on a home or for legal fees).
- *To be legally binding, agreements must be in writing and signed by both spouses and by witnesses. Having Independent Legal Advice, and making sure the agreement is property witnessed are important steps to making your agreement stick.
Michael Butterfield, Lawyer and Mediator notes, “spouses can be reluctant to bring these sorts of issues up at the beginning of a relationship. In the event of separation, however, a bit of forward planning can save thousands of dollars and reduce conflict overall”.
What does it cost? A legally binding cohabitation agreement can be drafted within a few weeks and costs as little as $1500.
Jayne Embree, M.A.
Jayne holds a Masters Degree in Psychology. She is currently Mr. Butterfield’s Legal Assistant and the Mediation Coordinator at Butterfield Law.