Com­mon-law ar­range­ments make sense for many se­niors, but there are still per­ils in prop­erty di­vi­sion.

The Globe and Mail Metro (Ontario Edition) - - News - ROB CAR­RICK

Shar­ing liv­ing spa­ces makes sense for many liv­ing off re­tire­ment funds, but they should take steps to avoid preda­tory be­haviour

Ris­ing rates of di­vorce among se­niors sug­gest they may need a re­fresher about some of the facts of life.

Here’s one: Con­sider the co-habi­ta­tion agree­ment if you de­cide to move in with some­one rather than get­ting re­mar­ried. Keep your re­tire­ment sav­ings safe.

At the Shul­man Law Firm in Toronto, they no­tice that di­vorced se­niors are in­creas­ingly choos­ing to live with new part­ners rather than get re­mar­ried. Ron Shul­man, the firm’s founder, won­ders if these se­niors are op­er­at­ing un­der the mis­con­cep­tion that there are no wor­ries about a di­vi­sion of prop­erty when a com­mon-law re­la­tion­ship ends.

In On­tario, there is no leg­is­lated re­quire­ment that com­mon-law part­ners di­vide their prop­erty if they split up, Mr. Shul­man said. Mar­ried cou­ples gen­er­ally share the value of their prop­erty when they di­vorce or sep­a­rate, while com­mon­law part­ners gen­er­ally take back what they had when they started the re­la­tion­ship and what they put in while to­gether (some other prov­inces are sim­i­lar).

Still, there are ex­cep­tions where it’s pos­si­ble for a com­mon-law spouse to claim that a part­ner’s as­sets should be shared. Mr. Shul­man said this kind of claim would de­pend on the ex­tent to which cou­ples have joined their fi­nances and life goals. For ex­am­ple, do they have com­mon bank ac­counts, have they co-min­gled their as­sets, pooled re­sources for com­mon goals or made con­tri­bu­tions to each other’s prop­erty of a fi­nan­cial or non­fi­nan­cial na­ture?

“These cases are no­to­ri­ously dif­fi­cult,” Mr. Shul­man said. “They are ex­pen­sive to lit­i­gate and they’re bet­ter avoided, or ne­go­ti­ated.”

His sug­ges­tion on how to avoid ar­gu­ments over as­sets is a co-habi­ta­tion agree­ment. Think of this doc­u­ment as a kind of prenup­tial agree­ment for cou­ples that will live to­gether. “I usu­ally rec­om­mend to clients that they look at this as not be­ing about what will hap­pen if you break up, but more as an in­sur­ance pol­icy to main­tain sta­bil­ity,” Mr. Shul­man said.

Co-habi­ta­tion agree­ments have be­come com­mon enough that there’s a Co­hab­i­ta­tionA­gree­ment.ca web­site of­fer­ing three lev­els of ser­vice at $59, $749 and $4,499. Mr. Shul­man es­ti­mates the cost at be­tween $2,000 to $5,000, de­pend­ing on the com­plex­ity and the amount of fi­nan­cial dis­clo­sure that is re­quired. He said the doc­u­ment would spec­ify what be­longs to who in a re­la­tion­ship and can also say which as­sets would go to whom if the re­la­tion­ship breaks down.

Co-habi­ta­tion agree­ments are rel­e­vant for com­mon-law cou­ples of all ages. But they make par­tic­u­lar sense for se­niors, es­pe­cially those who have sub­stan­tial sav­ings for their re­tire­ment. A claim to share as­sets launched by a for­mer com­mon-law spouse could dev­as­tate these sav­ings, Mr. Shul­man said. A co-habi­ta­tion agree­ment can also pro­tect se­niors against preda­tory re­la­tion­ships where some­one is af­ter their wealth.

Sug­gest­ing se­niors con­sider a co­hab­i­ta­tion agree­ment when mov­ing in to­gether might sound like niche ad­vice for a small mi­nor­ity. But di­vorce rates are on the rise among the broad pop­u­la­tion and for se­niors in par­tic­u­lar. Mean­while, there’s a grow­ing ac­cep­tance across the broad pop­u­la­tion of liv­ing to­gether rather than mar­ry­ing. Re­cent cen­sus data shows that a lit­tle more than 20 per cent of all cou­ples lived to­gether in 2016, more than triple the level of 1981.

Mr. Shul­man said his firm has in re­cent years seen par­ents com­ing in to in­quire about the ins and outs of prenup­tial agree­ments for adult chil­dren who are get­ting mar­ried. Now the firm is start­ing to hear from adult chil­dren con­cerned about par­ents in com­mon-law re­la­tion­ships.

These chil­dren are con­cerned about par­ents los­ing their fi­nan­cial in­de­pen­dence if the re­la­tion­ship ends, but there could be more to it than that. An aged par­ent ex­it­ing a com­mon-law re­la­tion­ship might have to give up as­sets that the chil­dren were ex­pect­ing. Or, a di­vi­sion of prop­erty might af­fect fi­nan­cial help that aged par­ent was able to pro­vide.

Urged by their chil­dren to have one of these agree­ments drafted, some se­niors seem sur­prised. “Their ques­tion is, ‘Why do you think I need a co-habi­ta­tion agree­ment? I’m not mar­ried, we just started liv­ing to­gether,’ ” Mr. Shul­man said.

“And then I ex­plain it to them and they say, ‘Wow, I didn’t know that.’ ”

ISTOCK

One law firm found that di­vorced se­niors are in­creas­ingly choos­ing to live with new part­ners rather than re­marry. Lawyers cau­tion those con­sid­er­ing this move to safe­guard prop­erty, even in com­mon-law liv­ing sit­u­a­tions.

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