Common law relationships are on the rise in Canada. It’s become popular for people to live together before marriage, and they sometimes choose common law instead of marriage. More and more older couples have taken this route.
Typically, older common law couples are people who have been married, have children, and have experienced the passing of a spouse or have gone through divorce after many years of marriage.
They often hold substantial assets which complicates things when they enter a new relationship and then decide to live together. Often, it’s their children who urge them to consult a lawyer and develop a cohabitation agreement. They are worried that mom’s or dad’s assets might have to be shared with the new common law partner. The couple will come in to negotiate a cohabitation agreement that will protect their assets should the common law partner pass away or the relationship fails.
Sometimes, the cohabitation agreement will stipulate that the other party has a claim to a certain percentage of the wealthier person’s assets after a certain period of time. For example,20 percent of the assets will be included after they have been together for five years, and if they have been together for more than 7 years, it increases to 35 percent. If they have been together for more than 10 years, it’s 50 percent.
These agreements are more likely to be upheld by the court because they are seen as a compromise. It’s not one-sided because of the clear intention to proportionally share certain assets over time. It is also more likely to be upheld in court when compared to an agreement where someone keeps all of their assets and the other person gets nothing.
The agreement creates clarity and mutual understanding between partners with well-established properties and assets. They now know where they both stand, a situation that creates reassurance for both the couple and their adult children.
Our lawyers can help you determine the best arrangements for you. We do cohabitation agreements on a regular basis so we can offer you good advice.