Two people are in love and are excited about starting their life together as a married couple, or are in a new relationship and are taking the next logical step of moving in with one another. The topic of whether or not to have a prenuptial agreement (marriage contract), or co-habitation agreement drawn up prior to taking this next big step in one’s relationship is hardly romantic. Quite frankly it is a very awkward conversation for most. It is entirely understandable why most choose not to pursue the topic with their significant other and simply hope for the best. However, the decision of whether to enter into a prenuptial agreement or cohabitation agreement it is a very important issue that everyone should at least turn their mind to before taking that next big step in their relationship.
As with almost all issues in family law there is never a “one size fits all” answer to the question of whether one should have a prenuptial or cohabitation agreement prepared. When a client or potential client poses this question I will need to ask that individual a number of detailed questions in order to determine their financial situation, their partner’s financial situation, their particular worries or concerns, and their objectives.
The two major issues for which one party, or in some cases both parties are attempting to protect themselves, and obtain some certainty moving forward concerns: 1. division of property and 2. spousal support. Some individuals who are at the early stages of their relationship and are not even considering marriage may assume that they do not need to turn their mind to this issue at least until the prospect of marriage is in sight. That assumption would be incorrect.
While it is true that unmarried spouses in Ontario have no automatic right to an equalization of net family property (click link for an article on this topic), or a sharing of family property accumulated during the relationship, there still remains potential claims for both property and spousal support for unmarried spouses.
Who Is Considered A Spouse In Ontario?
Pursuant to Section 29 of the Ontario Family Law Act a “spouse” is defined as follows:
“spouse” means a spouse as defined in subsection 1(1), and in addition includes either of two persons who are not married to each other and have cohabited,
(a) continuously for a period of not less than three years, or
(b) in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act.”
Section 1(1) of the Family Law Act referred to in section 29 also includes within the definition of a spouse two persons who are: (a) married to one another, or (b) have entered into a marriage that is voidable or void, in good faith on the part of the person relying on the clause to assert any right.
So to summarize in Ontario an individual will be considered a “spouse” at least for the purposes of potential spousal support obligations if they: i) are married, ii) have lived together continuously for three (3) years or more, or iii) are in a relationship of some permanence and have a child from the relationship.
A potential obligation for a spouse to pay spousal support to the other spouse can potentially trigger upon separation assuming the party making the claim for spousal support meets the definition of a spouse.
Can Property Division Issues Still Arise For Unmarried Spouses Who Separate?
The short answer is to this question is a resounding yes. There are a number of ways property division issues still arise for non-married spouses who separate. One of the most common claims pursued by non-married or “common law” spouses upon separation occurs when there has been a relationship of some duration but the family home is only owned by one of the spouses. The spouse who is not titled owner of the home may argue that they have contributed to the increased equity in the home and are owed compensation as a result. This type of claim is known as an “unjust enrichment” claim. The law of unjust enrichment is fairly complex and is certainly an entire topic of it’s own.
An individual who owns their own home and has decided to take their relationship to the next step by moving in with their partner may limit their exposure to this type of claim in the event the relationship does not last. The party or both parties may simply wish to document the financial arrangement and expectations of the parties within a cohabitation agreement so it is clear to both individuals moving forward.
Spouses may also be seeking to clearly identify ahead of time how their personal property items are going to be divided up between them should they separate and avoid potential dispute down the road. For example the spouses may which to document within a cohabitation agreement that all personal property items they brought into the relationship or purchased on their own during the relationship, will be their own property, free of any claim from the other upon separation.
Obviously the question of whether to enter into a prenuptial agreement or marriage contract is even more pertinent when a marriage is on the horizon. This is especially true where there is a large disparity in the net worth, potential net worth, and / or earning capacity of the spouses.
The topic of whether or not to pursue a prenuptial agreement or cohabitation agreement is by no means a conversation spouses look forward to having as it can be awkward, and may potentially result in feelings of distrust or resentment. However, it is most certainly an important legal issue most should at least turn their minds to prior to taking that next step in their relationship.
This article is by no means meant to be taken as legal advice. If you have legal questions about any of the issues raised within this article it is important to consult with a lawyer and obtain legal advice that is particular to your situation.
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Serge Ettinger is a lawyer in Thunder Bay Ontario practicing primarily in the area of family law. If you are dealing with a family law issue in the Thunder Bay, Ontario area call Serge Ettinger Law Office Professional Corporation for a consultation today.
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