Common questions answered about “prenuptial agreements”
Cohabitation is becoming increasingly common in British Columbia, with more and more couples choosing to live together. However, not all cohabitating couples understand the legal effect of residing with their partner, and how under the eyes of the law, it could be substantially the same as choosing to get married.
In British Columbia, a couple residing together in a “marriage-like relationship” for a period of two years are, for the purposes of spousal support, property division, and debt division – spouses. This means that if the couple separates, they may be liable to one another for spousal support, division of property, or division of debt.
When determining how property is divided between spouses on separation, the courts will go back to the date the parties first began cohabitating. Any property that was accrued since the move-in date (with some exceptions), and any increase in value of property owned as of the move-in date, is presumptively divisible 50/50. Any debts incurred for a family purpose can also be divisible.
In cities like Vancouver, where property can skyrocket and businesses can boom, a 50/50 divide isn’t always fair. For example, if one partner owned a $500,000 property on the cohabitation date, and it became a $700,000 property when the couple separated three years later, their short term partner is now presumptively entitled to 50% of the appreciation in value – being $100,000 – after only cohabitating for three years. And this figure doesn’t include any spousal support payments to be made.
For that reason, more and more couples in British Columbia are considering cohabitation agreements. If you are currently living with your partner, or have married your partner, it’s not too late to decide to enter into a cohabitation agreement or a marriage agreement. A cohabitation and marriage agreement are substantially the same, and will apply dependent on whether the couples are or intend to be married. A couple can choose to be governed by a cohabitation agreement or marriage agreement at any time.
A cohabitation agreement is a legal document that outlines the rights and responsibilities of each partner in a cohabiting relationship. It covers issues such as property ownership, debt, and spousal support in the event of a breakup. While many people assume that cohabitation agreements are only necessary for those who have significant assets or wealth, the truth is that they are beneficial for all couples who are living together.
Here are some of the key reasons why British Columbians should have cohabitation agreements:
One of the biggest reasons to create a cohabitation agreement is to protect your assets. Without a cohabitation agreement, it can be difficult to determine who owns what in the event of a breakup. A cohabitation agreement can help to clarify ownership of property and assets, which can help to avoid disputes and ensure that each partner gets a fair share of what they are entitled to.
In addition, cohabitation agreements do not prevent the giving of gifts. They simply allow the parties to share property on their terms and when they wish to.
A cohabitation agreement can also help to clarify each partner’s responsibilities. For example, it can specify who is responsible for paying certain bills or who will be responsible for caring for any pets. This can help to avoid misunderstandings and conflicts down the road. A good cohabitation won’t just prevent conflict when a couple separates, it will prevent conflict during the relationship – and may be what saves the relationship.
A cohabitation agreement can also provide a sense of security for both partners. Knowing that there is a clear plan in place in the event of a breakup can help to alleviate some of the anxiety and uncertainty that can come with cohabitation. It can also help to ensure that each partner is treated fairly and that their needs are taken into consideration. Cohabitation agreements may be often used as a means of protecting wealth, but they should also be used as a tool for guaranteeing security for a primary caregiver or homemaker. Any party who is taking time away from their career for the benefit of the family should do so with the knowledge that they will be compensated for the sacrifices they made for the benefit of their partner.
Avoiding Legal Battles
A cohabitation agreement can help to avoid legal battles in the event of a breakup. Without an agreement, it may be necessary to go to court to determine how assets should be divided or how much spousal support should be paid. This can be a costly and time-consuming process, and it can also be emotionally draining. By creating a cohabitation agreement, you can avoid this scenario and ensure that the breakup is as smooth and amicable as possible.
Responding to a Changing Relationship
Cohabitation agreements are made to allow parties to plan financially during the relationship without fear of losing control of their financial circumstances in the event of a breakup. However, they can always be amended or rewritten as the parties’ relationship develops and they can include review clauses to obligate the parties to review the agreement as the relationship passes certain milestones. Your cohabitation agreement can be revised when you’re married, or when several years have passed, or when you and your partner have children. With a cohabitation agreement, you determine what’s fair for your relationship.
A cohabitation agreement is an important document for any couple who is living together in British Columbia.
This blog post provides legal information, but is not a substitute for legal advice. If you have a question about cohabitation agreements, need help with drafting a cohabitation agreement, or questions about another legal matter, contact Naz Khodarahmi for a complimentary consultation. You can book a consult through www.macushlaw.ca through our booking system or contact Naz at [email protected] or 604-612-8024.
If you would like a personalized quote based on the terms of your agreement with your partner, book a complimentary consult with us.