Cohabitation Agreement vs. Prenuptial Agreement

Author: Mullen & Company | | Categories: Business Lawyer , Commercial Lawyer , Corporate Lawyer , Estate Planning , Incorporation Lawyer , Power of Attorney , Probate Lawyer , Real Estate Lawyer , Wills Lawyer

Marriage or Common Law? Both Are Legal Commitments

Commercial Lawyer Calgary

It doesn’t have to be Valentine’s Day for love to be in the air.

Those who choose to formalize their relationship through a legal marriage are subject to laws that offer protection and consideration of asset ownership and care of children, should the relationship come to an end.

However, the increasing number of couples who are making the equally important decision to live together in a common-law-relationship may be surprised to discover the avoidance of the perceived commitment of “marriage” doesn’t mean their union is free of legal obligations similar to marriage and terminating the relationship can have legal consequences.

Common Law Obligations

The I do’s and I don’ts of Relationships:

In Alberta, the Matrimonial Property Act is the law that courts apply to a fractured marriage when attempting to separate property and assets. It helps determine the rights you may have to property acquired during or before the marriage. It also sets out exemptions for some properties including gifts and inheritances.

The Matrimonial Property Act doesn’t apply to common-law-relationships — but that doesn’t mean you’re free of any obligations. In 2003, the Alberta Government introduced the Interdependent Relationships Act in response to the increasing numbers of people entering non-married relationships. If you’ve been living together for 3 years or more, this legislation applies to your situation. It may apply sooner if you have children from the relationship. (Note the Government of Canada and other Provinces have varying living-together requirements, some are as little as 1 year.)

Other legislation may also apply to your situation, including the Wills and Succession Act, Divorce Act, the Family Law Act, the Dower Act, and others.

Cohabitation Agreement vs. Prenuptial Agreement

Important Factors to Consider:

If you are entering into a relationship, whether marriage or common law, both you and your partner may want to consider having Mullen and Company prepare a prenuptial agreement or cohabitation agreement.

A prenuptial agreement (a “domestic contract” or “marriage contract”) sets out rules pertaining to a marriage and what will take place if the marriage should breakdown. It can deal with division of property and spousal support. Likewise, a cohabitation agreement offers similar benefits for non-married, common-law relationships.

Here’s a list of situations that make it advisable to have a legal professional prepare a prenuptial agreement or a cohabitation agreement:

If either member of the couple…

  • owns significant assets, especially in comparison to the other spouse/partner;
  • is entering into a second relationship;
  • has children; or
  • has obligations to a former spouse or children.

During my years of professional experience, it seems, not surprisingly, that couples with significant financial inequality when beginning a relationship are the ones most likely to benefit from a prenuptial agreement or cohabitation agreement.

But with marriages and cohabiting relationships being delayed until later in life, people are entering these commitments with greater personal financial and property assets.

These considerations are complicated further when second marriages/cohabitation events occur and significant assets are brought into the relationship by one party while the other may not have similar financial resources to fall back on should a divorce result.

Minor children are another very important consideration because they always have rights to Child Support. No adult can “sign away” his/her responsibility for their child, and the lack of a marriage or partner commitment doesn’t remove these legal obligations. The courts will also look at the role of a parent in relationship to raising children. For example, if an older man with assets enters a cohabitation relationship with a younger woman of more limited means, and she stays home and raises children while sacrificing a career, he may have obligations to her and those children for decades, if he decides to exit the relationship.

Although these topics don’t flow well into the usual discussions of wedding plans, honeymoons or dreams of a long future together, taking time to consider each partners’ obligations is a wise and healthy way to consider the responsibilities of the commitments being made. The truth is, relationships (formal or otherwise) aren’t only built on love, they are also subject to prevailing regulations of Family Law.

Love is always in the air — and the laws are always on the books. Mullen & Company can assist you when considering these important questions, and help you build the foundation of what will hopefully become a strong and permanent relationship.