A cohabitation agreement is optional in Ontario. In second relationships, it can clarify property and support obligations and complement estate plans for children from earlier relationships.
Do I Need a Cohabitation Agreement for a Second Relationship in Ontario?
If you already own your home, have money put aside for retirement or have children from previous relationships, there are things you need to think about regarding payment of maintenance, what purchases will be made jointly and what maintenance is required.
Section 53 of the Family Law Act, in Ontario, Canada, allows couples who are living or planning on living together and who are not married to each other to enter into a cohabitation agreement. This agreement may also be known as a common-law agreement and may include provisions regarding property, support payments and other financial arrangements.
Can a Cohabitation Agreement Protect My House in Ontario?
Yes. An agreement can determine the ownership of the house and whether any contribution provides the other partner with an entitlement to either repayment or equity. In Ontario, statutory property equalization is limited to marriages. In the case of common-law relationships, the title determines the ownership of the property and the agreement can establish financial terms for the parties. The court may also provide a remedy, such as compensation, for unjust enrichment if one party is enriched at the expense of the other.
For example, consider a divorced homeowner in Toronto, Ontario, who is the sole owner of a house resulting from a prior marriage. The partner proposes contributing $25,000 to the renovation of the house. The homeowner and the partner can decide that the former will reimburse the partner for the amount on separation or that the latter will get a specific share of the equity in the house.
How Can You Keep Savings, Pensions and Business Interests Separate?
List what each partner brings into the relationship and record its value at the start. Include savings, investments, inherited assets, business interests, pensions and debts. Specify who keeps any growth in value, how you will treat future contributions and which purchases you will own jointly.
For an employer pension, check whether an earlier separation agreement or court order already divided any benefits. Ask the plan administrator about existing survivor benefits and any statutory forms required for a proposed division or waiver.
When Can Spousal Support Apply in a Second Relationship?
Under sections 29 and 30 of the Family Law Act, unmarried partners can qualify to claim spousal support after at least three continuous years of cohabitation. A shorter period can qualify if the relationship has some permanence and both are parents of the same child under Ontario’s Children’s Law Reform Act.
Whether support is payable depends on factors such as financial need, ability to pay, caregiving and existing legal obligations to support someone else. The agreement can set support terms, leave the issue open or include a waiver. Under section 33(4), a court can set aside a support term or waiver in specified circumstances. One ground is an outcome so unfair that the court considers it unconscionable.
How Do You Prepare a Cohabitation Agreement for a Blended Family?
Start with the obligations you already have, such as child support or a requirement to keep life insurance in place. Use those commitments to guide both your agreement and your estate plan.
What Are the Steps to Make an Enforceable Agreement?
- Exchange financial records. Share income information, asset values, debts and other significant liabilities. Include existing support orders, prior settlements and relevant pension and business records.
- Draft the terms. Set out ownership, household contributions, support and any obligations on death. Specify what each partner owes on separation, how to calculate it and when payment is due.
- Get independent legal advice. Each partner should have a separate lawyer review the draft and explain any rights they may be giving up. This voluntary safeguard can help show that each person understood the terms. In the Greater Toronto Area (GTA), a Toronto cohabitation agreement lawyer can also explain how the draft fits with your earlier settlement.
- Sign with a witness. Section 55(1) of the Family Law Act requires a written agreement signed by both partners and witnessed. The same requirements apply if you later agree to amend or cancel it.
Under section 56(4), a court may set aside all or part of an agreement if a partner failed to disclose significant assets, debts or other liabilities that existed when they signed. A court may also intervene if a partner signed without understanding the agreement’s nature or consequences. Other contract-law grounds, such as coercive pressure that amounts to duress, can also apply.
What Can the Agreement Say About Children From Earlier Relationships?
You can agree on how to share household costs for the children and budget for existing child support payments. Section 53 excludes parenting time and decision-making responsibility, the authority to make major decisions about a child. Under section 56(1.1), a court can disregard a child support term that is unreasonable in light of the child support guidelines and related terms in the agreement. A stepparent who has shown a settled intention to treat a child as part of their family may also owe support.
How Can I Protect My Children’s Inheritance in a Second Relationship?
Coordinate your agreement with your will, beneficiary designations and property title. The agreement can set obligations between partners on death. Your will directs assets that pass through your estate. Survivorship rights and valid beneficiary designations can direct other assets, and pension plans can have separate survivor rules.
Suppose a widowed parent wants inherited investments to pass to their two children. They can check whether each account passes through the estate or by beneficiary designation. Then they can update the will or beneficiary form and check that the agreement supports the plan.
Under Ontario’s Succession Law Reform Act, a common-law partner has no automatic share of the estate if their partner dies without a will. A qualifying dependant can seek estate support if the deceased provided or legally owed them support immediately before death and made inadequate provision. A court can order support despite a waiver.
Contact BTL LAW in Toronto to discuss drafting or reviewing a cohabitation agreement for your second relationship.
