Common Legal Concepts Explained


Cohabitation Agreements

Individuals wishing to live together may feel more secure deciding some of their financial issues in advance. These decisions are the basis of a Cohabitation Agreement.

A Cohabitation Agreement sets out terms of the financial relationship of a couple—regardless of gender—who live together. This helps to mitigate disputes with respect to support or property should they decide to separate. Among other factors, a couple may wish to decide on support payments, division of certain assets, or buy-out terms of jointly held assets such as a home.

A cohabitation agreement is tailored to be as unique as the people for whom it is designed. And should the couple marry, the cohabitation agreement can easily become a Marriage Agreement.

Marriage Agreements

A Marriage Agreement (or Prenuptial Agreement) is similar to a Cohabitation Agreement since both set out terms of the financial relationship of two people should they decide to separate.

A Marriage Agreement pertains to individuals planning on marriage or who are currently married to each other and who wish to determine their financial arrangements should the marriage end.

The primary issues contained in a Marriage Agreement are usually division of property and spousal support. It is often helpful if a couple, aided by their lawyer, decides on terms of these issues in advance so that potential disputes can be resolved in a timely fashion and with minimal cost.

Up until 2005, marriage contracts were reserved for opposite sex couples only and while cohabitation agreements could become marriage contracts upon an opposite sex couple’s marriage, this was not the case for same-sex couples. Now, same-sex couples with cohabitation contracts would be wise to review and/or revise these agreements in the event that they wish to marry.

Regardless of gender, a Marriage Agreement is especially beneficial to protect each individual’s personal assets or business interests in the event of a separation.


The Family Law Act of Ontario governs the property rights of married spouses. The philosophy of the Family Law Act is that, subject to certain exceptions, any financial growth during the marriage is to be shared equally by both spouses.

Accordingly, upon separation or death, a calculation is done separately for each spouse to determine the growth in the value of that spouse’s assets during the marriage (called “net family property”) and a payment is then made by one party to the other (called “an equalization payment”).

Under the Family Law Act, there is no actual sharing of property and each party is entitled to retain whatever property they own, subject to the requirement that one spouse may have to buy out the other.

In order to do the calculation, each party prepares a statement of his or her assets and debts at the date of marriage and at the date of separation or death. The value of the net assets at the date of marriage is deducted.

While these examples are very general, they provide a sense of how the scheme works.

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