Should I have a Cohabitation Agreement?

From the desk of Louise P. Campbell Q.C.:

1. A Cohabitation Agreement would protect all of the increase in value on your house even if  your partner has already moved in.  Without an agreement, he or she could claim up to 50% of any increase in value, since the move-in date, even if the house is solely in your name.  The same could apply to any of your other assets, such as pension or retirement investments.
2. A Cohabitation agreement would also show good faith from your partner;  that he or she is in the relationship to be with you, and not for a share of your money.
3. It can also define Spousal support obligations between you.  At present, without an agreement, if you earn more than your new partner, then his or her present lifestyle is dependent upon you and your earnings.  If the two of you separated, the partner’s lifestyle would suffer, and that person would have a claim against you for spousal support, possibly until you retired.  The longer you are in the relationship, the stronger the spousal support claim.
4. If the two of you purchased a house together, the claims on the equity and value in that house would depend partly upon how much each of you put in, and also upon what type of ownership the house is registered in:  whether it is Joint Tenancy, or Tenants in Common.  The former would mean that if one of you died, the other gets the whole house outright.  It also implies that each party is sharing the equity 50/50, even if that was not the contribution.  The latter has to be defined as to what proportion each person owns, usually based upon the contribution by each party.  If one party dies, that party’s share goes to his or her estate.  The other party would have to buy out that share, or sell the house.  Again, it would be much better if these rights were defined in an agreement, rather than leaving it to chance as to what might happen upon separation or death, and hoping the other person will be “fair.

It is best to do the co-habitation agreement before you begin to co-habit because all parties are motivated at that time to resolved all present and future issues but the agreement can be done at any time to protect your and you family or children’s interests.