Co-Habitation & Marriage Agreements
The new Family Law Act (BC) makes living together in a common law relationship virtually no different than being married. The intent was likely to make sense of an area of law that was entirely dependent on the discretion of the Court. That made giving legal advice to common law spouses very difficult as similar facts were often seemingly treated very differently by the Courts.
The new Act actually makes a lot of sense on the face of it: what you have at separation is “Family Property”. From the pile of Family Property (which includes debts) you take out “Excluded Property”. Excluded property is basically the property each spouse brought into the relationship or received as gifts or inheritances from third parties during the relationship. Any increased value of Excluded Property is Family Property. Family Property is presumed to be divided equally.
Pretty simple. And largely what many common law spouses were doing in their co-habitation agreements prior to the new Act. However the Courts are now getting involved and starting to make decisions that make the simplicity of the Act more difficult to give legal opinions on. Earlier decisions essentially ignored the Act saying that the spouses did not consider it as it was not around when the spouses were together. More recent decisions contradict each other on whether Excluded Property put into joint names remains excluded. The likelihood is that there will be more contradictory Court decisions in the coming months and years until the Court of Appeal sorts out the contradictions, at huge cost to the unlucky family that takes the case to appeal.
If you are in a common law relationship (living together for two years or have a child together) or getting to the point where you qualify as being in a common law relationship, you may wish to consider making a Co-Habitation Agreement to ensure that your expectations in the relationship are followed in the event of a separation.
A Marriage Agreement is really the same as a Co-Habitation Agreement, except it is for spouses who are married rather than living in a common law relationship. As the law is essentially the same for married and unmarried spouses, all the same reasons for considering a Co-Habitation Agreement by common law spouses apply to married spouses in consideration of a Marriage Agreement.
Co-Habitation or Marriage Agreements should particularly be considered where:
- One spouse is a beneficiary of a discretionary or other family trust,
- Either spouse has children from a prior relationship,
- Either spouse has received or may receive during the relationship gifts or inheritances from third parties,
- One spouse has substantially greater financial resources or income than the other
- Either spouse is or may be put on title to a parent’s home or property for estate purposes
- Either spouse has property (real estate, corporate shares, intellectual property, works of art, collections, etc.) that may substantially increase in value
Except for those few separating spouses who have their decisions made for them by the court, ultimately an agreement between the spouses is reached. Most spouses need assistance in reaching this state of agreement which is why there are the different processes listed under Main Services [Link]. For some few spouses however, they do not require assistance in reaching the decisions to be made following separation. For these spouses, it may be most prudent to reduce their decisions to writing in the form of a separation agreement without the cost of any of the processes listed under Main Services. We are happy to provide this service in an efficient and cost effective manner. Typically this means that we are retained as a lawyer for one of the spouses, draft the agreement, give that spouse independent legal advice on the agreement and then provide the agreement to the other spouse to take to a lawyer of their choosing for independent legal advice. To ensure that a separation is binding, each spouse must receive independent legal advice and the agreement must fully disclose all material assets, liabilities and income, even where there is agreement related to these items. In fact, the duty to disclose is highest when a spouse waives an interest in an asset or income to ensure that the waiver is done with full knowledge and consent of what is being waived.
In the vast majority of separations, the prudent process is to reach an agreement that sets out each spouse’s rights and obligations to each other and the children as a first step before obtaining a divorce. When this is done, the divorce can be filed and proceed in an uncontested manner which is efficient and inexpensive. This firm provides a service for obtaining a divorce order from the court, from start to finish, where the spouses are cooperative, local and have reached a written agreement on all issues (especially those relating to parenting and supporting any children in accordance with the Federal Child Support Guidelines) of $1,500 including legal fees, disbursements and taxes.