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What is a "cohabitation agreement" and is it a good idea?

Like a marriage contract, a cohabitation agreement is a legal contract between couples who have chosen to live together (regardless of gender). But in cohabitation, there is no marriage that took place. The contract is usually prepared by a family attorney and is created to protect the interests of the couple from unnecessary cost and legal actions should their cohabitation end.

Just like a prenuptial agreement, a cohabitation agreement allows the couple to determine in advance who gets to keep specific assets and what will happen to assets acquired jointly should they separate. However, it is important to note that these two are different.

A cohabitation agreement will not be valid once the couple gets married. A prenuptial agreement, on the other hand, becomes effective only upon marriage. Most jurisdictions have implemented rules on prenuptial agreements, but very few states have adopted laws dealing with cohabitation.

8 Things Every Cohabitation Agreement Should Contain

Cohabitation agreements are usually flexible because they are less regulated by law. Here are key points that a cohabitation agreement typically contains:

  1. Distribution of property upon death or breakup.

  2. Child support, custody or visitation rights if you have minor children (although nonbinding).

  3. Financial support obligations during the relationship or upon its termination.

  4. Division of the principal residence in case of breakup or death.

  5. Determining the partner to act as guardian/conservator in case of disability.

  6. Health insurance coverage.

  7. Right to make medical decisions.

  8. Payment of debts.

What are the benefits of a cohabitation agreement?

Although your partner is no stranger to you and even your entire family, the sad thing is in the eyes of the law he or she is still not family. In case of death and there’s no will, the law will follow legal procedures in passing on your assets to people other than your partner. Or your partner may benefit more than you had intended.

Equitable doctrines exist in some courts to divide properties between cohabitants. But they are complicated and costly to validate. So it’s better to be practical by having a legal contract clearly outline your partnership. The following are other reasons why you need cohabitation agreement:

  • To guarantee an equitable settlement to the less financially secure partner.

  • To ensure your partner is properly compensated as custodian.

  • To limit the exposure of the more financially secure partner in case of dissolution of the partnership.

  • To identify business and personal relationship expectations.

Cohabitation Agreement Vs. Marriage Contract

The law does not provide the same protection to cohabiting couples as it does with married couples. When you choose cohabitation, you are foregoing certain rights and protections that come with marriage. The following are two examples of the major difference:

  1. Married couples divide the family assets accordingly, upon separation or divorce, regardless of whose name the property is held in. In the case of cohabiting couples, the person who owns the assets legally has the right to keep them solely and owes no maintenance to the other, unless there are children involved.

  2. In case of death in a marriage, and no valid will was created, the assets will be passed to the spouse or civil partner. A cohabiting partner, on the other hand, will not get the assets if they belong to their deceased partner. It will be passed on to his/her family in accordance with the law.

There could be a lot of reasons why you would choose cohabitation over marriage. But the fact remains that you are not legally secure if you don’t have a cohabitation agreement. The law will see you as strangers despite years of partnership.

Need more help?

Yes, am I picking a good partner to be my spouse?

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