More and more people these days are choosing to live together before marriage.
For some couples marriage isn’t a priority or may not even be in their plan at all. This is a very personal choice and every couple is different when it comes to how they want to define their relationship. However, there are some legal ramifications to co-habitation that are important to consider. Here are a few things you should know about common-law relationships and how to protect yourself should you and your partner decide to split.
What is a common-law relationship?
If you have been living with your partner for over three years or have children with them, you are most likely in a common-law relationship. While many people believe this gives them the same rights to property as being married this is not the case. Under the Family Law Act common-law spouses are not entitled to any property division in the province of Ontario, unlike married spouses who are entitled to half of the assets.
How is property divided in a common-law relationship breakdown?
No matter how long you have been in the relationship property is divided based on what you brought into the cohabitation. Although cohabitating couples are not entitled to equal property division you might be entitled to a property division based on your contribution to your common-law spouse’s property.
This is based on the principle of unjust enrichment which happens when one spouse has acquired assets based on the other’s contribution. This occurs most often with the family home either by monetary investment or labour. Regardless, to claim unjust enrichment the contribution must be clear and direct.
Do you need a cohabitation agreement?
Cohabitation agreements are always a good idea. They protect you in the same way a marriage contract does with married couples. A cohabitation agreement can determine how you or your common-law spouse will divide your jointly owned property should you separate, as well as support payments. You can even decide to proceed as if you were married and go through the equalization process.
Cohabitation agreements are also useful in deciding who is responsible for which financial obligations during the relationship. Many couples have found this useful in avoiding future arguments as they have already decided who will pay for what in their agreement.
Even if you are not considered to be in a common-law relationship you can still create a cohabitation agreement. No one wants to think about possible separation but with separation and divorce rates hovering at around 50 per cent it is an important thing to keep in mind. The best time to determine how you will end your relationship is when you are happy and in love with each other.