Cohabitation Agreements, Prenuptial Agreements, and Marriage Agreements
1 – What is the difference between a prenuptial agreement (“prenup”), cohabitation agreement, and a marriage agreement?
In short, there is very little difference between the three agreements above. A prenup or a marriage agreement is a contract you sign with your romantic partner before you get married to them or after marriage when your relationship is still in a good place. A cohabitation agreement is a contract you sign with your romantic partner before you move in with them or when you have moved in with no intention of getting married in the near future. A single contract can serve as a cohabitation agreement when the parties are living together and then as a marriage agreement when they decide to marry. In the remaining sections of this agreement, when I talk about a “cohabitation agreement” I am referring to all three names.
2- What is the point of getting a cohabitation agreement?
The family law regime in British Columbia and Canada is based on the Divorce Act, a law passed by the Federal Parliament, and the Family Law Act, a law passed by British Columbia’s provincial legislature. These two acts set out what rights and responsibilities two romantic partners have after they separate from each other. The Divorce Act and the Family Law act are lengthy and complicated pieces of legislation and explaining them is beyond the scope of this article, but certain parts of those two laws affects the rights of everyday British Columbians after they separate from their partners.
The Family Law Act defines classes of property as “family property” and “separate property” and states that family property is to be split 50/50 between the spouses after separation. There are similar provisions that apply to debt and state the family debt is to be split between the spouses. The Family Law Act also states that a spouse can apply to receive spousal support from their ex-partner after separation. Finally, the Family Law Act sets out the entitlement of children to child support from their parents.
The key point to keep in mind is that the Family Law Act defines spouse differently than most people would assume. Section 3 of the Act states:
3 (1)A person is a spouse for the purposes of this Act if the person
(a) is married to another person, or
(b) has lived with another person in a marriage-like relationship, and
(i) has done so for a continuous period of at least 2 years, or
(ii) except in Parts 5[Property Division]and 6[Pension Division], has a child with the other person.
Therefore, the definition of spouses in the Family Law Act includes couples who have never married each other – a concept that is often referred to as a “common law marriage” in day-to-day parlance. This means that two people who have moved in together for any reason and are in a marriage-like (romantic) relationship can be considered spouses after two years and may have rights to each other’s property and pensions after separation.
Couples who have an eye towards the future and plan for unexpected circumstances can recognize the inherent risk of the legal regime and the value of cohabitation agreements. No one can predict what will happen in a decade, two decades, or even further in the future. Without care and planning in the present, one or both spouses can be put in dire financial and legal straits if the relationship breaks down. A separation where the spouses go to court over property disputes can costs thousands of dollars, take years to resolve, cause psychological anguish, and damage the parties’ reputation. It can also lead to court decisions that leave parties in difficult financial positions for the rest of their lives.
For example, the case of P(D) v S(A), 2021 NWTSC 30 is about a couple who separated when they were in their early fifties in 2003. A court order was made in 2006 ordering the husband to pay $2000 of spousal support to his ex-wife every month. This order was varied on the husband’s application in 2017 to reduce the amount of spousal support to $1200 a month. In 2021, the husband, now in his 70s and living with poor health, had to apply to the court again to ask that he no longer pay spousal support, as he could no longer work reliably and needed to retire.
The case shows that a separation under the default rules of property division and spousal support can lead to a person having to pay spousal support to their ex-spouse for over 15 years. The spouses had to go to court and fight multiple times during this time period.
If the parties had a properly drafted cohabitation agreement, they may have been able to resolve this issue at the time of their separation in 2003.
3 – How can you convince your partner that getting a cohabitation agreement is a good idea?
You and your partner should sit down and have a honest discussion with each other. You should ask yourselves the following questions:
- Who should be making decisions about our lives? Should we create a cohabitation agreement right now that we have a good relationship and can do so, or should we risk an acrimonious separation in the future, a court fight, and a judge who does not know much about us making decisions about our lives?
- How financially savvy are we? Do we want to spend the money right now to have a properly drafted cohabitation agreement or do we want to pay thousands of dollars in legal fees to resolve our disputes if we separate?
- How important is the ability to plan our future and our retirement? Do we want to have certainty and stability so that we can effectively plan our retirement or do we want to risk a relationship breakdown also throwing a wrench into our retirement plans?
Once you have had this discussion, you can reach a collaborative decision regarding whether getting a cohabitation agreement is the best choice for you and your family.
4 – Is a cohabitation agreement a certain way of protecting your rights?
No, it is not. Section 93 of the Family Law Act allows the Supreme Court of British Columbia to set aside an agreement that it finds to be significantly unfair based on certain considerations set out in that section.
Therefore, it is crucial that your cohabitation agreement be drafted with the assistance of a lawyer with expertise in this area of the law and knowledge of what steps to take to draft an agreement that can give you and your family the most certainty.
Reach out today for a consultation with Amir Ghorbani, Pax Law’s family lawyer, regarding a cohabitation agreement for you and your partner.