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Common Law Issues The law regarding common law relationships is different than in cases of divorce. Discuss the issues that affect unmarried couples here.

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  #1  
Old 09-06-2011, 09:43 PM
italguy italguy is offline
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Default Alberta - protection of assets

My girlfriend and I have been dating for 1.5 years and in a few months are planning on having her move into my home. Through a lot of saving and hardwork, my home was fully paid for a couple of years ago (at age of 33) and needless to say I am proud of this and want to protect it in the event of a breakdown down the road. In addition I have substantial savings – about ½ in RRSP and ½ in non RRSP accounts and I have a high savings rate so in ten years I expect my savings to be to the point where I should be able to retire early.

I am in Alberta and have read up on the Adult Interdependent Act as much as I could online. A little more about us – we both do not want kids (this will not change) and neither of us have any desire to get married. I make about twice what she makes but she has no trouble supporting herself at all and is in a stable career. We talked about the living arrangements and we both agree that is fair that she pays for ½ of the utilities, ½ of the cable and the same amount she is paying now for renters insurance as my home policy would cover her contents as well. All told she will pay me about $200 per month.

Currently she is paying near $1500 to rent an apartment, so financially for her it is a good move and on the face of things I feel it would be extremely unfair for someone to get access to a $400,000+ asset for a few hundred $’s a month especially when they are saving a considerable amount in the arrangement. I specifically want to exclude her paying any of the property taxes, major maintenance, etc – anything directly related to owning the house. I imagine she would help with minor maintenance though such as the gardening and painting. Household duties would be 50/50 since we both work part time. We have talked about buying new furniture (about $4000 total) and will split the costs of that and have discussed that in the event of a breakdown, the party keeping the furniture would give the other party the other half.

So my four questions are:

1) Given the fact that we will not marry down the road and that property one owns at the time of entering into a common law relationship remains in the hands of the original owner, is it necessary to have a cohabitation agreement? I can’t envision any scenario where I would be unjustly enriched given the mortgage is paid off and she is only contributing for ½ of utilities, cable and contents insurance. Given how the Act is worded in my mind an agreement doesn’t add any security.

2) The same question as 1 applies to my investments. I will be funding my own investments 100% and not contributing to a spousal RRSP but only my personal one. Is she entitled to what I have today or what I will have x years from now?

3) Although unlikely, if we wanted to purchase a new property, we would sell the home and use proceeds for a new property. Would this then be considered communal property? It would be very clear and easy to tell that proceeds of sale on the home were used to fund the new purchase.

4) If the answer to 1 is yes (needing a cohabitation agreement), can this be drafted by the two of us or is a lawyer necessary?
  #2  
Old 09-06-2011, 09:54 PM
raven70 raven70 is offline
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Default Cohabitation Agreement

You need a Cohabitation Agreement each being represented by differnet
lawyers so that it holds up in a court of law.

The agreement can have all the exact details and calculations that you
wish it to have in it.

My friend in a simular position to you just did this in B.C. There was a cost
of 3000.00 between the two lawyers,

best of luck to you, Raven
  #3  
Old 09-07-2011, 12:08 AM
beebie beebie is offline
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A cohabitation agreement can't hurt and will only protect you more by allowing the contract you agree on (the Agreement) to override any applicable Statutes such as AIP or the law of constructive trust. There are a few Statutes you cannot contract out of- maybe Dependent's Relief Act and others in Alberta but plenty that you can.

For example, after 3 yrs cohab in Alta , she could claim any increase in value of your stocks over the term of your cohabitation

Consider how much you have at stake and whether it is worth it to you.

What would happen on your death? The new Wills and Succession Act in Alberta would allow her to make an immediate matrimonial property claim against your estate. Maybe you want that ; maybe you don't.

Put your Agreement in writing and both get independent legal advice and make it as bullet proof as possible. Make sure you use a family lawyer not a Joe Blow. And make sure you consider the new Wills and Succession Act in drafting any Agreement.

Yes you can write it yourself but you won't find too many lawyers who will review such a document and you need independent legal advice or one party can overturn the Agreement down the road.
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Old 09-10-2011, 01:17 AM
italguy italguy is offline
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Quote:
Originally Posted by beebie View Post
A cohabitation agreement can't hurt and will only protect you more by allowing the contract you agree on (the Agreement) to override any applicable Statutes such as AIP or the law of constructive trust. There are a few Statutes you cannot contract out of- maybe Dependent's Relief Act and others in Alberta but plenty that you can.

For example, after 3 yrs cohab in Alta , she could claim any increase in value of your stocks over the term of your cohabitation

Consider how much you have at stake and whether it is worth it to you.

What would happen on your death? The new Wills and Succession Act in Alberta would allow her to make an immediate matrimonial property claim against your estate. Maybe you want that ; maybe you don't.

Put your Agreement in writing and both get independent legal advice and make it as bullet proof as possible. Make sure you use a family lawyer not a Joe Blow. And make sure you consider the new Wills and Succession Act in drafting any Agreement.

Yes you can write it yourself but you won't find too many lawyers who will review such a document and you need independent legal advice or one party can overturn the Agreement down the road.
In the case of investments, why would a common law partner be entitled to anything? Everything is being kept separate and clearly any RRSP or non RRSP deposits would be made by me (no intermingling of funds) so I don't understand how they could possibly have a claim on anything
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Old 09-10-2011, 12:34 PM
italguy italguy is offline
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Quote:
Originally Posted by italguy View Post
In the case of investments, why would a common law partner be entitled to anything? Everything is being kept separate and clearly any RRSP or non RRSP deposits would be made by me (no intermingling of funds) so I don't understand how they could possibly have a claim on anything
Also, from my research on Canlii, it appears as though claims to home/other investments arise in situations where there are a) kids (we definitely will not have kids) or b) where the 'spouse' could not or did not work and created a situation where they get a claim on assets due to taking care of the household for which the judge will assign an arbitrary % award.

In my case we will both work and be 100% self sufficient adults and in her case saving a significant amount per year in rent (over 10K)

The reason I am hesitant on an agreement is that it is alot more expensive than I thought and that I really don't want to disclose all of my non home assets if I don't have to. It's my business and mine alone.
  #6  
Old 09-10-2011, 01:25 PM
standing on the sidelines standing on the sidelines is offline
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Yes it may be fine now and both supporting yourselves. But what happens if she is struck by an illness that forces her to stop working? So many different things may happen and you know what, better safe then sorry. You seem to have substantial assets so spending a few grand now, may save you 10,000 or more later. do the math,
  #7  
Old 09-10-2011, 02:27 PM
italguy italguy is offline
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If I were to get an agreement completed, would it have to be done now at the 1.5 year mark or could it wait a year once we have already moved in together? Technically we would not be common low until after 3 years of cohabitation.
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Old 09-10-2011, 02:28 PM
beebie beebie is offline
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Standing on the sidelines is so so right. You have significant net worth and you are risking it. A co-habitation agreement will protect you. I am not a legal expert in these areas so you don't have to listen to me. But if you searched Canlii and read a SCC case called Miglin, you would learn something about the value of agreements.

For example, the increase in the value of the house could be shared in the future if you split. Although the house is now in your name, she could say she helped fix it up, pay for utilities and if you get the full value, that would be unjust enrichment. Yes what you paid for it is exempt from sharing but it will increase in value. Common law is a "marriage like" relationship.

Additionally, if she claims she paid for groceries and utilities while you stashed money in RRSPs, she may have a claim on those too. Draft your own agreement if you must (my friend has one that is 20 pages long and quite comprehensive). Lawyers get the parties to waive spousal support for example.

In the end you two must take it to separate lawyers to get it reviewed and a Certificate of Independent Legal Advice. I am pretty sure that $1500 for the Agreement and $500 for the second party to get independent advice is all my friend paid but obviously it depends on the complexity of the financial affairs.

You can both agree not to provide complete financial disclosure, that you are satisfied with what has been provided. It is far better to provide it though and have her agree that she is contracting with full knowledge that you have assets that she will not share in the event of separation.

Don't rush; there are many books in your local law library (yes i am a librarian) that will discuss this thoroughly (the Internet is not always what it is hyped to be for legal information).
  #9  
Old 09-10-2011, 02:29 PM
beebie beebie is offline
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You can do it later and call it a marriage contract.
  #10  
Old 09-10-2011, 02:35 PM
italguy italguy is offline
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Beebie, thanks for the answers. We do not intend to get married. If we lived together for abit and then signed something in a year (so in other words going out for 2.5 years, living together for 1 at that point), could the other party claim something like being under duress to sign????
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