More and more millennials are living together with their partners and not getting married. According to the Financial Post, common law relationships have increased four times from 1981 to 2011 in Canada. There are a myriad of reasons why we are shacking up and living together with our
partners, months or years after dating. Some of these are not very good reasons, such as to save money in a high cost of living area, wanting to test drive living together before committing (which can be a good reason to live together), or just not wanting to be living alone. Unfortunately, it seems that people are just ‘sliding’ into relationships more often these days without communicating about what their expectations are in the relationship. In any case, if you are planning on living together and in an intimate relationship, you should probably think about a cohabitation agreement.
Cohabitation agreements aren’t very popular though. An Ipsos poll by Global News found that only 8% of married couples have a prenuptial agreement, and even less common law couples have a cohabitation agreement.
I have two girlfriends who came in with more assets (they each owned a one bedroom condo) than their current boyfriends. Both received
nagging encouragement from me to look into a cohabitation agreement. Both earn more than their boyfriends. They were unaware that in British Columbia, the laws have changed and if you have a child or have lived together for more than two years in a living together arrangement/ intimate relationship then you are considered common law married. This means that there are similar laws as if you were married. This could mean that any appreciation from their condo during their relationship would be divisible by half in the event they split up and their ex wants to divvy their assets up. Not only condo, but pension, investments, and anything that increased during the relationship.
Eventually, after living together for a few months, both brought up writing up a cohabitation agreement with their boyfriend (who were both insulted unfortunately) and ended up writing one up but without witnesses or having it notarized (e.g. not official). I guess better than nothing?
Another example is an older colleague of mine who was with her common law husband for 15 years. She owned a house in Vancouver that was given to her by her mother. They both lived in it for 15 years. I think they had their arguments here and there but she seemed happy and spoke of him in a good light all the time. Then one day, he decided to leave her and their cat and then asked to have the house and their assets (including her pension) divided up. It was a completely horrific and heart breaking experience for her.
Thankfully I learned my own lesson, I was living with my ex-boyfriend for 1.5 years (a few more months and we could have been considered common law married) in a house we bought together. We called it quits and split the house in half. I was lucky in that we didn’t split it further or get nitty gritty with the details (I know a person who is divorcing from his ex wife who is arguing with him about dividing up their Aeroplan points).
When I was dating my husband, I didn’t want to live together until I had the green light of commitment first (engagement) and that worked for me- it might not be for everyone! And even then we drafted up a prenuptial agreement. It wasn’t easy to write up because it required us to think about what would happen if we were to ever dissolve our future marriage, but I am glad we did one.
check out the laws in your province first
The laws vary from province to province.
In British Columbia, the Family Law act according to Clicklaw Wikibooks states that if you have a child and you are in a common law relationship for under two years, you are only entitled to spousal support and not division of assets and debt. If you are in a relationship living together for more than two years and the relationship disintegrates, you are entitled to division of assets and debt and have similar rights to if you were married.
For example, in Ontario, if you are living together even for 8 years and you split up, you are not automatically entitled to the division of assets, according to Ontario Family Law.
You can call the Dial a Law service to for more information on laws for the other provinces or territories. I am not a lawyer so I am not sure about what they are.
why you need a cohabitation agreement
The reason you would need a cohabitation agreement is to protect your assets. Unfortunately no one can predict the future and what happens in the relationship. I didn’t think that my ex and I would end up having to sell the house at the time we bought the house! Life can be very unpredictable that way. One minute you’re doing great and the next you don’t know what hit you.
Of course, if you’re both young, have similar assets and perhaps similar incomes, and are renting and dividing things up 50/50 anyways, spending the $500 to $2000 to get one done might not be necessary for you. It all depends on your level of risk that you want to take.
Related: End of Life Planning Checklist in Canada
it’s not that difficult to create
Cohabitation agreements are not that difficult to create, and in fact, there are some that you can create online (just like my friends did). However, for it to be truly enforceable in court, you are each encouraged to get your own lawyer and legal advice, to make sure that neither of you were coerced into writing the agreement.
Readers, do you live together with your partner?
Do you have a cohabitation agreement or have you discussed what might happen if things were to go sour in the relationship?
What are the laws in your neck of the woods regarding ‘common-law’-like relationships?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.
29 thoughts on “Living Together? Think About a Cohabitation Agreement”
My now husband and I moved in together during grad school. We started dating young, so we had been together for 3.5 years at that point. It saved us loads of money and in undergrad we spent so many nights at the other persons’ place that it made sense.
We were fortunate that neither of us had any assets that would need splitting up at that point. I had intended to keep all of our finances separate until we were at least engaged, but by living together, it got a little messy. Finally, I accepted that it’d be best if we just blended our money a bit more. It worked for us (until this year, we’ve always made almost identical salaries), but I wouldn’t advise anyone to follow our path, each relationship is so unique. It would have definitely been most prudent to keep things separate.
I believe common law marriage is seven years of living together. We lived together for four years before getting married, so we didn’t get anywhere near that number.
@Mrs. Kiwi- Interesting to hear how different the common law rules are from different parts, thank you for sharing Mrs. Kiwi! What state are you living in? I think cohabitation agreements work well for those who have assets or who are older when they meet.
My partner and I have a cohabitation agreement in place because we both had assets and we met in our late 40’s. It was a mutual decision and it was pretty straight forward. What’s his is his, what’s mine is mine!
I wouldn’t have agreed to move in together without it, I worked too hard to get where I am.
I will investigate more on the 8 years in Ontario, I thought it was just a couple of years.
@Caroline- Thank you for sharing Caroline! Ah, of course, you did- you are so organized and a go-getter! Your partner is very lucky to have such an organized woman as his partner (especially one who delivers Valentine’s in the form of power point presentations). Yes, I think in the case of second living-together relationships it makes sense and is very important.
Hi GYM, I will run this by Mrs. DD. I’m thinking I will ask for snow shoveling and lawn care services. 🙂 Tom
@Tom- Haha, let me know what she thinks- there may need to be a revision to the cohab agreement.
I talked to Mrs. DD. She said in exchange for an agreement that awards her sole control over all our money she would be happy to mow the lawn and shovel the drive. Who said money can’t buy love? Tom
@Tom- Haha 🙂 So did you agree to the terms? That would mean she will take over the Dividend Deluxe portfolio!
We had a cohabitation agreement – it was one of my requirements for him moving in. We had it notarized too! I found a template off the internet and that’s what we used, basically to declare everything separate and that him paying utilities or anything like that didn’t give him any ownership in my condo. That one was SO much easier than the postnup when he bought into the condo or updating it when he bought in to 50/50. Probably helped that we didn’t hire lawyers since mine was the most stressful part of the postnup process. My advice to anyone doing a document like this is to know mostly what you want before talking to a lawyer to see if they are on board with it when you interview them.
@Leigh- Hiring a lawyer was a stressful experience for me- your advice is very sound- you have to know what you want otherwise you may add up a lot more cost/revisions. It was a lot of unnecessary back and forth. Having one that you found on the internet and just getting it notarized sounds very stress-free! Yeah, your post-nup sounds complicated! But now that it’s done it must be a great feeling!
“have lived together for more than two years in a living together arrangement/ intimate relationship then you are considered common law married.”
WHAT?? I don’t understand why common law marriage is a thing. If people wanted to be married, they would, wouldn’t they? How does the state get to impose the status and restrictions of marrage on a couple for cohabitating?
California doesn’t recognize common law marriage, for which I’m rather glad.
PiC and I *did* cohabitate and we were lucky. While it was tough to adapt at first, it was also really good for both of us at a time when I could not have afforded my own place in the Bay Area in addition to supporting my family back home. We SHOULD have had an agreement but we did it completely without guiderails, totally uncharacteristically. Had it gone awry, it would have been exponentially worse than if we had broken up when living separately and mostly worse for me if we’d broken up any time in the first two years I lived up here. Things turned out as well as they could have, instead, and I’m grateful for that too.
@Revanche- I think the Family Law Act was created in 2013 to protect women and children, especially children. There are more and more families that do not get married and have children. Mainly because they don’t want the ceremony, or they don’t agree with the institution of marriage.. for a lot of reasons (I have a few friends who have kids and are unmarried). I shrug my shoulders, it’s the Canadian/British Columbia way! 🙂
I think in your case when you and PiC cohabitated is more favorable in California than in BC because there are no serious financial implications as you state in California (e.g. everything appreciated is divisible 50/50).
I’ve always avoided moving in with people because I didn’t want to deal with the complications, and also feel pressured to get married because that’s the “next step.” And I agree that it’s so important to check the laws in the state you live in, since some laws are so messed up. No way is my husband gonna fight me for my credit card points! As a data point, in New York, cohabitants aren’t really entitled to things married couples are.
That link with the questions to ask is a great resource! I see lots of articles are prenups, etc., but none that help you think through every scenario.
@The Luxe Strategist- I think Teddy is such a nice guy he would never fight you for your credit card points! (Unless you do that walk-through/experiment to demonstrate how easy it is to use the hack/maximize points for that free flight to Paris). My husband never lived with someone until me and so far we are in 450 square feet with a baby (and my dog) and it’s working out well. I have a theory that ‘if you want to make it work, you will make it work’ so the ‘testing if we live well together’ is not needed if you both plan to get married. Thanks for sharing the deets for New York! Maybe this is just a Canadian thing so far??
Good advise GYM.
We didn’t have any agreement in place but we where just starting out and had very little. After putting up with me for 26 years and married for 22 years, my wife deserves it ALL anyway. Great post
@Steve- Aweee!! So sweet!! Congratulations on 26 years together and 22 years of marriage!
Mother with Cents and I didn’t move in together until a month before we got married. And at that time all of our assets were separate with some student loans I still had to pay on my own until I paid it off six months into our marriage. Today we still have some assets that we separate but have a few joint accounts.
Here in California, they don’t have a common law marriage being recognized which I’m happy for because it’s sounds a bit complicated from how you described it. And plus it could turn into some nasty battles if couples decide to divorce.
@Kris- I think my husband and I moved in slowly together right before we got married- but I can’t remember clearly- everything before the baby seems to be a blur! Thanks for sharing what you and Mother with Cents did! Good for you for paying off your student loans so quickly after you got hitched- starting with a clean slate together!
Lily and I “slid into” living together relatively early; thankfully it turned out well! The closest thing we had to a cohabitation agreement was an expense list where we made sure to split everything 50/50 (more or less). We were renting and both had similar incomes, but the best thing would probably have been to draw up an agreement.
And the kicker is that we’re both lawyers! I feel like those doctors that eat all sorts of junk food…
@Miguel- You and Lily are the cutest! I think you and Lily and Luxe and Teddy Luxband are about tied for cutest PF blogger couple if an award for the cutest PF blogger couple were to ever be awarded at the Plutus Awards! Haha, it’s so hard to practice what we preach, but it worked out well for you!
OH man – I hope Mr. DS and I are still in the running for most dorkable?! 🙂
Yikes – nice thought provoking article on common law. Honestly, the thoughts never crossed my mind. When two broke college students decide to hook up, not much to take in the beginning! TBH – I never moved officially moved in within him until after we were married for 2 weeks?! Due to crazy work schedules, and I needed help moving out of my college apartment/back into his area after we were married. It was hilarious driving back from the airport after we got married…and we go our separate locations back to our places since we needed to work the next day. lol. We got a lot of crap from our friends and family on that one, “soooo you guys are married….and don’t live together.” <– I think that just catapulted us into first place for most dorkable!
I did have a cousin who was in a relationship with a gal for 7 years or so? He was ready to propose, and she just up and walks out…wanted to be single and mingle again. Luckily, she left everything in the apartment pretty much. He had furnished most of it since it was his before her. She even left a closet with clothes and luggage…I graciously accepted this as payment for helping him clean his place and move into a smaller unit 🙂
I would have to google the laws for our area as these thoughts never came to mind! I would have just assumed it would never hold up in a court of law here…but now I don't know! Great piece!
@Mrs DS- Haha, oh dear, of course didn’t forget about you and Mr. DS! Okay you THREE couples are in the running for the cutest PF bloggers! Hah, that’s a great memory and a good story to tell your little one- that mom and dad were married but started living together 2 weeks after you got hitched. That’s good that you fit into your cousins’ ex gf clothes. That is so sad though- that’s pretty much was my story. My ex said he wanted to try Nutella and even though he liked peanut butter he wanted to see what was out there.
It’s so interesting that it’s different from state to state and from province to province. Something to look up for sure before moving in together.
I was young and naive when I moved in my husband (who was my boyfriend at the time!) We both had zero assets, I had a ton of debt, and we were both so poor. I’m sure if we actually had money, we would’ve done things differently! That’s crazy it’s two years for common law marriage!!! I think in the states it is 7.
@Steph- You and your husband have been through a lot together! Thanks, glad you liked it. It’s my nagging-girlfriend voice to all my British Columbia sistahs out there!
Before I was married, i bought a house with my girlfriend whose is now my wife. We didn’t have a cohabitation agreement back then, but in hindsight, the prudent thing to do is to draft one up.
Most people thinks that their relationship will not disintegrate or nothing will happen. By the time that it does, it may be too late to protect your asset. Th way how I look at it is if your relationship is strong enough, you can talk about anything.
@Leo- Yeah, even if your relationship is strong though I can see how bringing up a Cohab agreement or a Prenup agreement can be difficult and can cause some tension. Even for my husband and I it was a difficult thing to discuss- and not without tears! (On my part haha).
Thanks for sharing what you did with your wife!
Oh wow I never heard of a cohabitation agreement before. I agree with Leo, it’s in hindsight just the smarter thing to do. Not to say the romance would be a little sucked out – but well worth it. Hurt feelings upfront is better than anger rooted after.
@Lily- What are the laws in Washington state? Yeah super non-romantic but it is nice to lay it all and it all about communication (which is what relationships are about right?)