Thinking of Moving in With Your Partner? Why More Common Law Couples Are Considering a Cohabitation Agreement

By Hailey Eisen

Wedding bells used to be the ultimate goal for couples, and while plenty of folks are still sealing the deal with a walk down the aisle these days, there are plenty more who aren’t driving off with a “just married” sign in tow. A quick Google search turns up countless articles about declining marriage rates, a global phenomenon with a number of plausible explanations.

Changing attitudes towards traditional marriage, along with factors like the COVID-19 pandemic’s disruption of wedding plans, the strains of inflation and rising living costs have shifted spending priorities. Many couples are now opting to forego the conventional wedding vows and instead focus on creating a life together directly.

“It’s certainly more culturally acceptable to live together now and have children outside of marriage,” says Pat Marshall, Director, Wealth Strategies with CIBC Private Wealth in British Columbia. “With common-law relationships being more prevalent, the social and legal treatments of the relationships are catching up with the legitimacy of traditional marriage.” 

The legal term for this is cohabitation: a living arrangement where two individuals, in a romantic relationship, decide to live together in the same household without being married. This arrangement can include couples of various genders and orientations, and has become more common in many cultures and societies over the past few decades.

Rights, Responsibilities, and the Impact of Location on Common Law Relationships

The legal and social recognition of cohabitation varies widely based on location. In some Canadian provinces, cohabitating couples might have access to certain legal rights and protections, while in others, their rights might be limited. For instance, marriage often grants specific legal benefits, such as inheritance rights and tax advantages, that cohabitation does not automatically provide.

“There are some jurisdictions where a common-law partner receives the same protections and benefits as a married individual, and in these places, the perceived advantage of marriage has changed,” explains Nathalie Boutet, Managing Partner of Boutet Family Law & Mediation in Toronto.

Couples who live together might still face some challenges when it comes to dividing property if there’s a breakdown of the relationship or the death of a partner. For example, common law couples don’t have the same rights as married couples to continue residing in the matrimonial home in the event of a relationship breakdown if they don’t own the property. Also, in some provinces, common law couples don’t have the right to equalize their assets upon a breakdown of the relationship. Regarding spousal support, laws across provinces tend to operate similarly for married and for couples living in a common law relationship. To address potential challenges and protect both individuals’ interests, some cohabitating couples choose to create a legal agreement or contract outlining how they will divide their assets and sometimes also how they plan to address spousal support if they separate.

Provide Clarity and Prevent Conflict

A cohabitation agreement provides clarity and certainty in the event of a separation.

“We tend to find that in any partnership, a lack of communication and unclear expectations is what gets people in trouble,” says Nathalie. “A cohabitation agreement clarifies in writing the intent of both individuals and often prevents unnecessary conflict if or when the relationship comes to an end.”

As one might imagine, couples often find it difficult to discuss these sorts of things when the relationship is new and thriving. No one wants to think about the end of their relationship when things are good. However, experts advise that when it comes to domestic agreements, there’s no time like the present.

“I would suggest starting to have these conversations when you think you’re in a serious relationship,” advises Elena Hoffstein, a lawyer with Miller Thomson LLP. “A contract between two people can always be changed.”

The Value of Preparation

Without a wedding to plan, it can be easier to go through the motions of a relationship and wake up one day to find yourself living together and raising kids. But, taking some time to think through the legal ramifications of your coupling could save you a lot of stress in case of uncoupling.

“I always recommend that people take time to understand the law and talk about it with their partner — even before they move in — so they can make better financial decisions together,” says Pat. “The more individuals feel they have something to lose, the more likely they are to get legal advice.”

It could be that the couple is going to move into one owned property by one partner, or that one partner is coming into the relationship with shares in a family business, or one partner has accumulated wealth prior to the partnership that she wants to protect.

“I always caution people against presuming the default position of the law will get it exactly right for their personal circumstance,” says Pat.

Timing Matters

Be informed of when the official cohabitation period begins because there are rights and responsibilities that automatically take effect after a certain amount of time. Again, this depends on where you’re located.

“In some jurisdictions, that timeframe to qualify as being in a common law relationship is as short as the time it takes to register a declaration of common law union with the province,” says Pat. “The longest automatic timeframe is three years. There are laws at both the federal and provincial levels, and they address four areas of personal finance: taxation, spousal support, division of assets, and rights at time of death.”

Pat also advises that even if you’re comfortable with the current laws, those laws may change, or you might move somewhere else where the laws are different.

“A legal document provides evidence of what the couple agreed to at a point in time and when the cohabitation started,” says Pat. “This can be useful to provide financial security down the road if, for example, one of the partners gives up his or her career for the family’s benefit or if a partner passes away and their children from a previous relationship are challenging their parent’s will to reduce the common-law’s share of the estate.”

An Essential Conversation for Cohabiting Couples

Once you’re having these critical conversations, Elena advises that all couples should also spend time doing their estate planning and ensure they have signed, updated wills in place. “If you die without a will, your cohabiting partner has no right to inherit your estate.”

The circumstances are specific to each partnership, but the facts remain the same. Taking care of the hard stuff, upfront, makes the wonderful parts of a relationship even better.

“Even if you think that divorce sounds so messy that it’s easier to avoid marriage altogether, the truth is, the most contentious and risky situation for a couple is to live together without any form of legal agreement. If they didn’t realize the ramifications of cohabitation when the relationship was good, waiting until it’s over doesn’t bode well for negotiating their individual expectations into a settlement,” says Pat.

Because the laws can be difficult to nail down, no couple should assume anything without first consulting a legal professional who specializes in family law. CIBC Private Wealth can provide support through all of life’s transitional moments — both planned and unexpected. If you have inquiries about safeguarding your wealth or would like to explore further, please visit CIBC Private Wealth to find out more.