Marriage/Cohabitation Agreements – The insurance policy for all relationships

When you’re getting married or beginning to live together, the last thing you might want to think about is your relationship ending. However, having a plan in the form of a marriage or cohabitation agreement can protect your rights should that relationship ever end.

A marriage/cohabitation agreement is a contract between two people in a relationship which dictates what happens to things such as property and monies if the relationship breaks down. Whether the agreement is called a Marriage agreement or a Cohabitation agreement simply depends on the marital status of the parties involved. The Family Law Act does not distinguish between the rights of unmarried and married spouses.

The benefit of a marriage/cohabitation agreement is that it can help outline how property is to be shared both before and after the relationship. It can also record the intentions concerning the respective roles and expectations of the parties during their relationship.

Generally, under the law in British Columbia, spouses are equally entitled to family property and equally responsible for family debt. This entitlement is only eligible for property and debt gained during the duration of the relationship. However, with the use of a marriage/cohabitation agreement, parties can divide up their assets however they see fit. This agreement even permits spousal support to be different from under the law. Like other agreements, however, a court can set it aside if there is inadequate disclosure as to property, debts and other relevant information, a party did not understand the nature or consequences of the agreement, or where one party is at a disadvantage when entering the agreement. The court will also assess if the agreement was unfair looking to the length of time passed since the agreement was made, the intention of the spouses, and the degree to which the spouses relied on the terms of the agreement.

With the ability of the courts to review the marriage/cohabitation agreement and potentially set components of it aside, you may be wondering what the value of a contract like this would be. The greatest gain is that your voice becomes a part of the decision making process. Without a contract like this, the courts have the right to determine what each party is entitled to if the relationship breaks down.  If you have a marriage/cohabitation agreement, you become the decision maker on important topics such as

  • Property: You can decide what happens to your property if the relationship falls apart and not rely on the courts general 50/50 split rule. You can also specify how property will be shared during the relationship.
  • Assets owned previous to the relationship: You can dictate which properties are not subject to division under the law that the parties are bringing into the relationship and can record agreement about its value. Significant assets can also be excluded including the increase of value of those assets over the time period of the relationship.
  • Spousal support: You can decide on the amount of spousal support to provide if the relationship ends.
  • Communication: It gives you the chance to discuss your finances in detail and potentially other contentious issues in advance. Another benefit is that those conversations can happen in a comfortable, private environment outside of a courtroom setting.
  • Estate litigation: This agreement provides for the protection of your property and assets when defending an action brought against your estate after your passing.
  • Children: If there are children from a previous relationship or other dependents, you can state your requests in this agreement.
  • Older Relationships: These types of agreements are excellent for those who are older and/or in a relationship that is one of companionship but may otherwise be mistaken as a marriage-like relationship. This agreement is also very applicable if are older and in a second or later relationship or if you are nearing retirement and want to ensure that retirement decisions are not limited to obligations owed to the other party.
  • Monies: If you have significant income-earning power and want to limit sharing future assets or support duties, this agreement can serve to protect these interests.
  • Debt: If your partner is coming into the relationship with significant debt and you wish to limit which debts are subject to division, you can stipulate that within this agreement.

 If I’m never getting married, is this agreement even applicable?

You don’t need to be getting married to have an agreement. Under the family law regime in British Columbia, parties are subject to equal division of property once they have been living together for two or more years. If you wish for that law to not apply to the division of your property, then you may want to consider a cohabitation agreement.

If I am getting married, when should I make this agreement?

If you are getting married, an agreement like this can be very useful for the above listed reasons; however, there are a few things to consider if marriage is on the horizon. To protect the enforcement of the agreement, the agreement should not be negotiated under the threat of a deadline. Therefore, if you are getting married it is best to get any marriage agreement completed well before the wedding. An agreement should also not be made without each party obtaining legal advice. Without it, there is a chance that an agreement will not be upheld if challenged in the future.

Preparing a contract like this can be a stressful, potentially uncomfortable thought, but the lawyers at Hamilton Duncan can help you through the process. With over 60 years of experience, we have the expertise and knowledge to ensure your assets are protected and your loved ones are cared for. If you have any questions, please do not hesitate to get in touch with myself, Marta, or anyone here at the firm. But regardless of who helps you, having an agreement like this is like insurance—you hope you never need to use it but it is there to support you in the event that the worst happens.