Do I Need a Cohabitation Agreement in British Columbia?
Living together is a major step in any relationship. While you’re busy merging your lives and furniture, there’s a practical document you might overlook: a cohabitation agreement. Many couples hesitate to discuss it, but creating a cohabitation agreement in British Columbia is a wise move that protects both partners. Here’s what you need to know about your common law rights as you draft your first cohabitation agreement.
Know Your Common-Law Rights in BC
In British Columbia, the law treats unmarried couples who have lived together in a marriage-like relationship for at least two years very similarly to married couples. These couples are considered “spouses” for the purposes of property division and spousal support. This means that if you separate, you could be entitled to half of the property accumulated during your relationship, and similarly, you might be obligated to share your property with your partner. You could also be required to pay spousal support or be eligible to receive it.
These common-law rights serve to protect partners who may be left financially vulnerable if the long-term relationship ends. However, these protections can also lead to unwanted outcomes for couples who prefer to keep their finances separate. A cohabitation agreement allows you to define your own rules for your relationship.
What Does a Cohabitation Agreement Cover?
A cohabitation agreement is a legal contract between two people who live together (or plan to) but are not married. It outlines how you will manage your financial affairs during the relationship and how assets and debts will be divided in the event of separation. These family agreements are flexible and can be tailored to your specific circumstances, but they typically address several key areas:
Property and Asset Division
A solid cohabitation agreement specifies how property will be divided upon separation. You can decide to:
- Keep Property Separate—Any assets you each bring into the relationship, and any assets you acquire in your own name during the relationship, remain your own.
- Share Certain Assets—You might agree to share specific assets, like a home you purchase together, but keep other assets, like investments or inheritances, separate.
- Define What Constitutes Family Property—You can create your own definition of what will be shared, which can differ from British Columbia’s default rules.
Responsibility for Debts
Just as assets can accumulate, so can debts. A cohabitation agreement clarifies who is responsible for which debts, both during the relationship and in the event of a separation. This prevents one partner from becoming liable for the other’s personal loans, credit card debt, or lines of credit.
Spousal Support
Under British Columbia family law, common-law partners may be entitled to spousal support upon separation. A cohabitation agreement allows you to decide this issue in advance. You can agree to waive spousal support entirely, or you can set specific terms for when it would be paid.
Why You Should Consider a Cohabitation Agreement
Creating a cohabitation agreement is a practical way to protect everyone’s interests. It doesn’t mean you expect to separate. Rather, family agreements are simply evidence that you’re planning for the future with honesty and clarity. Here are a few reasons you should consider one:
- Financial Protection—A cohabitation agreement protects your individual assets, especially if one partner has significantly more wealth or property.
- Clarity and Certainty—An agreement removes ambiguity. Both partners know exactly where they stand financially, which can prevent misunderstandings and conflict down the road.
- Avoid Costly Disputes—A cohabitation agreement provides a clear roadmap for the division of property and minimizes the need for lengthy and expensive legal battles.
- Customized for Your Relationship—These agreements allow you to create rules unique to your situation, rather than relying on the one-size-fits-all approach of provincial law.
How to Create a Cohabitation Agreement in British Columbia
Creating a legally sound cohabitation agreement involves a few key steps. While you can draft one yourselves, seeking legal advice is highly recommended to ensure it’s enforceable. For a cohabitation agreement to be valid and enforceable in British Columbia, it must meet these conditions:
- The agreement must be in writing and signed by both partners.
- The signatures must be witnessed.
- Both partners must provide full and honest financial disclosure. This means sharing all information about your assets, debts, and income.
- The agreement must be entered into voluntarily, without any coercion or pressure.
Do I Need a Legal Professional?
While working with a legal professional isn’t strictly required, it’s strongly advised that each partner hire their own representation. Again, the goal isn’t to cause conflict, but rather to ensure:
- Both partners fully understand their rights and the terms of the agreement.
- The agreement is fair and doesn’t unfairly favour one party.
- The agreement cannot be challenged on the basis that one person didn’t understand what they were signing or was pressured.
How Much Does a Cohabitation Agreement Cost?
The cost of creating a cohabitation agreement can vary. If your financial situation is straightforward, you might pay for a few hours of a lawyer’s time to draft and review the document. Costs typically increase depending on the complexity of your assets and the extent of negotiations. Any reputable legal professional will be glad to consult with you and provide a fee estimate before you commit to their services.
The Risks of Not Having an Agreement
It’s tempting to forego family agreements altogether, especially if you don’t anticipate any problems in the future. However, life is unpredictable, and leaving property division up to chance isn’t in your best interest. If you skip drafting a cohabitation agreement, you could put yourself at risk for these situations:
- You may have to share assets you considered your own, such as business assets, investments, or an increase in the value of property you owned before the relationship.
- You could become responsible for a portion of your partner’s debts.
- A lengthy and expensive court battle could arise from disagreements over property division or spousal support.
Let Us Help You Plan for the Future
Cohabitation agreements help lay a strong foundation for your relationship going forward. As you plan for the future, look to Clark Woods LLP for help. Our law firm is experienced in many facets of family law, and we’d be glad to help you draft an agreement that makes sense for everyone involved. We proudly serve the Lower Mainland and Metro Vancouver with exceptional legal representation. Contact us today to schedule a consultation.
