The growing trend to cohabitate (or live together with a partner), instead of marrying, is steadily gaining pace. Perhaps fuelled by the belief that it is easier to walk away if the “union” does not work, or a wedding is a financial expense rather avoided, or the misconception that common law status is achieved after a certain number of years anyway.

Today, more than 20% of children are born to  cohabiting couples. However, only about one third of  those children will remain with both their parents  throughout their childhood.

Unfortunately, nothing involving matters of the heart, coupled with finances is ever that easy to just dissolve. If couples who cohabitate do not have a cohabitation agreement, neither has any financial protection or recourse.

If you feel cohabitation is still the best option for you, then it is imperative to draw up a cohabitation agreement to protect both yourself and your partner. A cohabitation agreement is very much like an anti-nuptial contract in that it determines up front whose assets are whose, and how assets purchased jointly will be divided upon separation. It is a legal document intended to protect both parties. However, if it is not upheld by a party upon separation, litigation in a high court is required to enforce the contract.

You must also be aware that a cohabitation agreement does not define you as a spouse; therefore you will never be entitled to your partner’s pension if they pass away, this will be paid to immediate family. So take care of your own pension and retirement needs. Current legislation does not protect you, despite the years you may have invested in the partnership.

Remember, living together does not entitle you to legal protection or rights, despite the number of years you may have been living together. A cohabitation agreement may just ease some of the confusion regarding what is whose, and define ownership of assets bought together, protecting both you and your partner.

Cohabitation has many implications around financial and estate planning and it is advisable to see a financial planner before planning finances etc.

Courtesy of First National Bank