Common-law couples could make their lives easier by drafting up simple cohabitation agreements, which Toronto family lawyer Elinor Shinehoft calls an incredibly underutilized tool.
“It’s a written instrument that allows the common-law couple to determine certain ways of dealing with issues on the breakdown of a relationship,” Shinehoft, principal of Toronto family and personal injury firm, Shinehoft Law, tells AdvocateDaily.com. “It basically establishes the rights and obligations, and the process for dividing property and dealing with support issues for common-law couples.
Common-law arrangements are recognized as being different from marital relationships in Canadian law, she adds. Although how they differ depends upon the type of law and the province in which the couple resides.
For income tax purposes, for example, common law is defined as a couple living together in a romantic relationship for a year or more.
But under family law in Ontario, a couple is recognized as being common law after they’ve lived together for three years. Access to children and parenting issues following a split as well as spousal support is the same for married and common-law couples.
“The biggest difference in the breakdown of a relationship is in property division,” she says.
For legally married couples the total accumulation of assets during the course of the marriage is examined. Whoever has the highest net worth pays half of the difference to the other spouse.
The situation is different for those in common-law relationships.
“Basically everything is going to be divided according to property law,” Shinehoft explains. “That essentially means whatever is owned in my name belongs to me, whatever is in your name belongs to you and anything that is jointly owned between the two will be split.
“The only way to negotiate your way out of that and engineer more protection for yourself in a common-law relationship is through a cohabitation agreement.”
It can deal with spousal support and property division issues and be as simple or detailed as the couple wants, much like a marriage contract.
The agreement can spell out a certain amount of spousal support, be silent on the issue or include that the parties want to maintain the rights available to them under the family law system.
The same applies to property. The couple can detail that the existing property arrangements be maintained. Or in a joint property purchase where one contributes more than the other, the cohabitation agreement could stipulate that that person gets a heightened percentage of that property upon a split.
“You want to clarify if you want something that is different from what the law provides. Some parties are prepared to share, some want to clarify and not share,” says Shinehoft. “I personally think that cohabitation agreements should be used more than they are. Many people aren’t aware of them.”
And these contracts can head off future trouble.
“I think it’s a good idea for anyone living together because there will be less conflict on breakdown,” Shinehoft says.
“If you do decide to get married down the road, your cohabitation agreement by default will basically become your marriage contract.”