Protecting Assets In A Common-Law Relationship
Without the ring—or a drunken rendition of the ‘YMCA’ surrounded by family and friends—British Columbia law may still consider you legally committed to your partner. As of March 18, 2013, after two years of living together in a common-law relationship, BC’s Family Law Act grants common-law couples the same property rights as those who are married.
You may not have said “I do,” but you could still be legally bound when it comes to dividing assets—or debts—should things not work out.
Assets include and are not limited to RRSPs, stocks, trusts, primary residences, investment properties, and stakes in a business. Debts such as student debt and business loans acquired within the relationship will also be divided up, though precedent has yet to be set on how that will be carried out, particularly where there are no assets to reapportion at separation.
We’re Marrying Later—If At All
More Canadians are entering relationships later in life, often with significant financial assets already in hand. Common-law relationships now have a higher breakup rate than marriages, yet fewer couples take the time to create cohabitation agreements. The debate surrounding a cohabitation agreement has fueled conversation and media coverage as to what this means for modern romance. As one male entrepreneur put it, “I feel like I am making her [his live-in girlfriend] out to be a gold digger.”
A further spin on the traditional, a third of Canadian women are out-earning their partners and are more likely to manage finances and long-term financial planning. The conversation with my girlfriends has shifted from “Would you sign a prenup?” to “How do you ask him to sign one?”
The reality is: a cohabitation agreement protects both parties—and supports transparency and fairness.
Here are some cues on how to navigate the inevitable cohabitation agreement.
1. DISCUSS FINANCES BEFORE MOVING IN
Money is one of the leading causes of breakups. Start with a full and honest conversation about your financial goals, spending habits, and boundaries.
Author Alison Sawyer, whose book If You Love Me, Put It In Writing has become a go-to legal guide, advises:
“Have a full and frank discussion about your finances and your willingness to share—or not share.”
A friend currently negotiating a cohabitation agreement with her partner told me, “It made us talk about who pays what, and how we manage our finances day to day. We avoided future arguments by being honest upfront.”
2. CONSULT A FAMILY LAWYER
A family lawyer can advise how the Family Law Act applies to you and your financial situations. The lawyer will draft a cohabitation agreement document the necessary items to determine the current assessment of your assets and how an agreement needs to be structured.
Procedural fairness,including full financial disclosure, is now required. This almost always involves independent legal advice for both parties and ideally an agreement drafted by a lawyer.
- Cohabitation Agreement: $2000–$4,000
- Independent Legal Advice: $$500- $1500
It’s an investment that could save you tens of thousands later.
3. GET IT IN WRITING- ALWAYS
Verbal agreements do not hold up in court. If you’re contributing to a mortgage, supporting a startup, or building shared assets, put the terms in writing.
I have witnessed even the savviest of business people make this mistake when it comes to love and it has cost them a lot of money. Do not assume your partner or ex partner will have the same expectations as you.
Real-life lesson:
I once built a home with a boyfriend. Thankfully, we had an agreement in place outlining how to handle things if we split. And we did—mid-build. But having a plan ahead of time made the process clear, fair, and far less stressful. We had that conversation while things were good, and it saved us from conflict when they weren’t.
4. KNOW WHAT’s AT STAKE – START TRACKING
The law considers asset appreciation from the day cohabitation begins, not the two-year mark. That means your net worth before you move in matters.
Keep documentation of:
- Property values (ask your real estate agent for a free market evaluation)
- RRSPs and bank balances
- Tax returns and investment accounts
Store copies in a secure location (e.g., a safety deposit box) and update them annually.
One lawyer put it simply:
“You can’t exclude the value of what you brought into the relationship if you have no proof of what it was worth.”
Protect Your Assets—And Your Peace
A cohabitation agreement in BC may not be romantic, but it’s practical. Think of it like insurance: you hope you never need it, but you’ll be grateful it’s there if things go sideways.
Need help starting the conversation? Use a third party—like a lawyer or financial advisor—to introduce the idea. It’s not about mistrust. It’s about mutual respect, clarity, and safeguarding your futures. Protect your hard-earned assets