In today’s world with so many marriages ending in divorce people are often choosing cohabitation over marriage. While cohabitation has increased many myths still exist about the concept of “living together”. The fact remains that, unless you define your partnership through a legal contract, the law may view you as strangers in the case of a breakup or death.
What is Cohabitation?
Recently the concept of cohabitation has expanded to include any two partners, regardless of sex, who have integrated their residence, property and daily lives. Many people view living together as a starting point for marriage while others consider it the final arrangement between them. There are numerous reasons individuals cohabitate, including:
- Avoiding the social, personal and legal commitment that marriage represents.
- Reduction of living expenses.
- Inability of same-sex individuals to be legally married.
- Choice by older individuals who don’t want to upset family or friends through remarriage.
The need for Cohabitation Agreements.
By choosing to live together rather than getting married the couple is giving up some of the rights and protections provided for them through marriage. Married couples have legal rights, including the right to receive a property settlement and/or support in the event of divorce; file joint tax returns; receive distributions from estates free of estate tax; receive survivor’s benefits from retirement plans and Social Security; obtain “family” health insurance, dental insurance, and other employment benefits; and automatically share in his/her partner’s property in the event he/she dies without a will. Unmarried couples, on the other hand, generally acquire similar rights only through cohabitation agreements. A cohabitation agreement is a private contract between two people, which tries to establish contractually for the parties the rights and obligations that married people obtain by custom, statute, and agreement.
Even though you may regard your partner as a member of your family, the law usually does not. As a result, your live in partner may not be provided for in the manner in which you wish. For example, if you die without a will or trust, your property generally will pass to your next-of-kin and not your partner.
Alternatively, the law may provide certain benefits for your partner that you had no intention of giving to him or her. Today, some courts are using equitable doctrines to apportion assets between cohabitants to prevent hardship and injustice. Since these doctrines are vague, they are difficult to interpret and often involve costly litigation. Therefore, you should be proactive and define your own partnership through a legal contract.
What to cover in a Cohabitation Agreement?
A cohabitation agreement is a flexible document that is less subject to regulation than a marital agreement. These contracts typically cover the following key points:
- Distributing property in case of death or breakup.
- Obligating financial support during the relationship or upon its dissolution.
- Handling the payment of debts.
- Dividing the principal residence upon breakup of the relationship or if one of you dies.
- Defining support, custody or visitation rights for minor children (although nonbinding).
- Specifying health insurance coverage. Create a ‘health care proxy’ that will allow your partner to make decisions about your health care in case of emergency.
- Determining the right to serve as guardian/conservator in the event of incapacitation.
- Establishing the right to make medical decisions.
Cohabitation Do’s and Don’ts
DO consider entering into a cohabitation agreement before moving in together.
DO hold title to any major purchases in the name of the person or persons who is/are actually paying for it.
DO keep finances separate if you want to avoid heated disputes in the event the relationship terminates.
DO keep accurate records of your financial contributions to any property held by your partner.
DO remember that a never-married parent has the same child support obligations as a once-married parent.
DON’T commingle your money by opening joint accounts, incurring joint debts, or making joint purchases if you want to avoid legal complications and the possibility of a “palimony” suit for support of your partner after a split.
DON’T allow your partner to hold title to major purchases in his or her name alone if you are both paying for that property, even if he or she orally agrees that the house or car belongs to both of you. The deed or title is more convincing evidence than one partner’s allegation of a spoken promise.
DON’T co-sign or guarantee debts that are incurred by your partner unless you intend to be equally responsible for paying them back, even if you should split up.
DON’T hold yourselves out to the public as husband and wife, allow yourselves to be known as or referred to as “Mr. and Mrs. So-and-so,” or use the same last name, even casually, if you want to avoid the legal complications of a “palimony” suit or the potential for common-law-marriage status should the relationship end.