As more and more couples choose to cohabit (live together without getting married), more people turn to cohabitation agreements (cohabs) to protect themselves in case of a split. Others, though, still erroneously believe that cohabitation (unlike marriage), keeps things more simple in the event couple decides to part ways. The truth is that even “just” cohabitating can bring about serious legal consequences. Just because a split is not called a “divorce,” doesn’t mean that there are no legal issues attached. Anytime two people live together for extended period of time, there will likely be: property disputes, possibility of palimony lawsuits, or custody and child support issues. It is important to consider all possibilities, as unromantic as it sounds. Although everyone hopes that love will last forever, the truth is, many relationships do end. People fall out of love, and people change. Discussing and planning for consequences of split, can not only help many people avoid potential complications, but can actually strengthen relationship by encouraging communication.
Drafting a cohabitation agreement will force a couple to learn more about each other. That includes learning about the person’s financial health and/or “baggage,” life style preferences, and expectations. Rather than focusing on roommate-like household issues, such as: who cleans the bathroom, who does the dishes, and who goes grocery shopping; a cohabiting couple need to focus on more serious issues likely to arise if the relationship does not work out. For example, if the parties separate, who moves out and who stays? Who gets to keep the family pet? How about splitting the jointly purchased furniture? A well drafted cohabitation agreement forces you to think about potential minefield, thus disarming some issues before they blow up.
In places like New Jersey, where common-law marriages are not recognized, and unmarried couples living together are considered legal strangers, a cohabitation agreement can prevent many legal headaches. New Jersey couples who live together without being formally married do not have many of the legal protections that married couples have. These “married” rights include: the right to receive a property settlement and/or support if there is a divorce, the right to file joint tax returns, the right to receive distributions from estates free of estate tax, the ability to receive survivor’s benefits from retirement plans and Social Security, obtaining “family” health insurance, dental insurance, and other employment benefits, and automatically sharing in his/her partner’s property in the event he or she dies without a will. To avail themselves of some of these rights, non-married couples can draft a comprehensive cohabitation agreement.
Naturally, not every couple planning to move in together (or already cohabiting) need a cohabitation agreement, just like not every couple planning to marry need a prenuptial agreement. If you have little savings and no assets, then you don’t have to worry about splitting your possessions with your ex. However, if you plan on buying a house together, one of you has significantly more assets or debts than the other person, or you want to have children together – you may want to plan ahead. Think about what is important to you. The typical items that are addressed in “cohabs” are shared property, partner support, pre-relationship or future debts, joint household purchases, educational expenses, pets, life insurance, health proxies and joint banking accounts among others. Moreover, you can even list the rules for your relationship, but legally enforcing these can be quite difficult. Note that if your agreement attempts to decide ahead of time who is to get custody of your children and how much support is to be paid, these provisions may be unenforceable as the Courts prefer to decide those issues themselves by determining what’s best for the child and not what’s best for you.
A cohabitation agreement will protect couple’s finances and may provide peace of mind, especially to those who have significant pre-existing assets, business interests, debts, or just a bad experience from a previous relationship. Cohabs just like prenups are no longer just for the rich and famous. It must be stated, however, that a cohabitation agreement should not be viewed as pre-planning for failure. Also, it should never be utilized as the bargaining tool to gain more leverage or control over a partner. Cohabitation agreement should be used as a tool to look at one’s finances and goals in life to ensure mutual satisfaction and peace of mind.
Just like with any legal contract, it is important to revisit your cohabitation agreement whenever a significant life event or change in circumstance occurs in your relationship to ensure that the document still protects you.