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Ontario law enables unmarried, or common-law spouses who plan to live together or in fact live together to enter into an agreement known as a cohabitation agreement. A cohabitation agreement provides for the rights and obligations each spouse will have as a result of their relationship. The main purpose of a cohabitation agreement is to protect a couple financially if the couple chooses to live together without being married. Cohabitation agreements cannot determine the rights of custody or access to children.
The property rights of married couples and unmarried couples in Ontario are substantively different. The Family Law Act recognizes that marriage is a form of economic partnership in which spouses share the value of property acquired during the marriage. This is done through an equalization payment, not a sharing of the assets themselves. Married spouses also have an equal right to continue to live in the matrimonial home.
These rules do not apply to unmarried couples. A cohabiting spouse who has not executed a cohabitation agreement must rely on equitable remedies to assert a claim against a property. The court determines the appropriate remedy, which may be a monetary award or a constructive trust over the property. For common-law spouses who choose to be financially independent, the agreement can provide that each party is responsible for his or her own financial support and has the rights to his or her own property.
Common-law spouses who choose to have a more financially interdependent relationship would approach their cohabitation agreement with different objectives. Regardless of the specifics of a cohabitation agreement, each agreement may consider pertinent financial details relating to children, career, retirement, purchases and savings, support, rights to inherit property in case of the death of one of the spouses and an acknowledgment of dependent children.
If the couple marries in the future, their cohabitation agreement may become a marriage contract, governing their changed status and the rights and obligations it entails, unless a contrary intention is indicated in their agreement. There is not the same consequence if a person enters a common-law relationship.