For a couple who chooses to move in together but does not intend to get married, a cohabitation agreement can provide clarity and security to both parties. More and more couples are realizing that a cohabitation agreement can help protect each partner’s individual interests while also providing legal recognition of the relationship.
A cohabitation agreement is an important legal document that helps couples outline their financial expectations for their relationship. In lieu of the legal and financial contract that married couples enter when they commence their marriage, a non-married but cohabitating couple can enter into a formal legal agreement that will provide each of them with certain rights, responsibilities, and protections that they choose and outline in their agreement.
This blog will discuss 5 ways a cohabitation agreement can benefit your relationship. By understanding these benefits, you may just decide that having a cohabitation agreement is right for you and your partner.
#1. Establishing Financial Transparency
As the first step in establishing a legally enforceable cohabitation agreement, each person in the relationship will need to provide the other with a full disclosure of their financial circumstances. This means that you will need to create a list of all your assets and debts to share with your partner. While it’s understandable to feel nervous or hesitant to take this step, it’s important to understand that this kind of transparency helps to ensure that you both are prepared for and fairly informed of the other’s financial situation.
In sharing your financial situations with each other, you can move in together confident that you understand where the other stands financially. After all, by moving in together you are agreeing to share expenses and contribute in some way to a shared financial future. This kind of transparency can also contribute to a mutual trust that can help strengthen your relationship.
#2. Outlining Your Financial Expectations
A cohabitation agreement can help a couple outline their financial expectations before moving in together. This includes detailing who will be responsible for paying which bills and debts, setting out each person’s level of expenditure, and deciding what assets each partner will bring into the relationship. Having this structure in place from the start ensures fairness between both parties and sets out clear boundaries when it comes to finances.
A cohabitation agreement can also help with conflict resolution when it comes to money-related problems down the line. This document can provide guidance on how to tackle disagreements during the relationship and put strategies in place for avoiding arguments regarding finances in future. Crucially, having this understanding already established at the beginning of a relationship provides more clarity further down the line ass a couple begins to make shared financial decisions over the course of their relationship.
Having a cohabitation agreement that lays out each partner's financial expectations can be beneficial if a couple faces new and unexpected financial decisions. For instance, if the couple decides to have a child, they can include provisions in their agreement regarding who will be responsible for what expenses related to the child. This could include things like daycare or education costs as well as any medical expenses associated with raising a child. If they decide that one parent should stay home with the child and put their career on hold, the cohabitation agreement could include a provision outlining financial support should they eventually separate.
Similarly, if the couple intends to purchase a house together, they can use the agreement to clearly outline which partner will contribute how much towards the down payment and other related costs such as closing fees and mortgage payments. Doing so can help both parties avoid disagreements over financial contributions later once they have already started making payments on the property.
#3. Clarify Roles and Responsibilities
A cohabitation agreement can help a couple clarify roles and responsibilities within the relationship. This is especially important for couples who are living together but not married, as it helps to ensure that each partner’s role in the relationship is clearly defined and understood. Having an agreement in place can be beneficial in outlining each party’s individual rights and obligations.
A cohabitation agreement can include provisions that address the following:
- How will the couple divide financial responsibilities if their incomes are different?
- How much notice does one partner have to give the other if they intend to move out?
- What arrangements will be made for childcare/education costs if applicable?
- How will assets be divided in the event of a separation?
- Will there be a plan in place if one partner loses their job?
- Will the couple set up joint accounts and with what parameters?
These are just some of the questions that may be addressed in a cohabitation agreement. By delineating these details, both partners can feel more secure in their relationship knowing that their expectations are outlined clearly and agreed to by the other party. Having this agreement in place also provides legal protection should a dispute ever arise between them in the future.
#4. Address Potential Issues if One Partner Moves Out or Passes Away
A cohabitation agreement can provide protection in the event of a partner’s death or relocation by outlining what assets and liabilities each partner will be responsible for should either one move out or pass away.
In the case of a partner who moves out, a cohabitation agreement can provide clarity on what items from the home must be returned and which ones are considered joint property. This document may also include provisions on how any shared debts will be handled between both parties once one partner has left the residence.
In the case of a partner who passes away, an agreement can provide clarity on how each partner would like to handle their assets. This document may also include provisions on how any shared debts will be handled between both parties if one partner has passed away. While a cohabitation agreement should not be considered a replacement for a will, it can provide clarity regarding each partner’s wishes.
Having this understanding already established at the beginning of a relationship provides more clarity further down the track should anything ever happen to either partner during their time living together.
#5. Provide Peace of Mind for Both Partners
A cohabitation agreement can also provide peace of mind to both partners involved. Having an agreement in place helps to give both parties a sense of security knowing that they’ve taken steps towards protecting their interests and those of their partner.
By understanding the benefits of a cohabitation agreement, couples can decide whether this document is right for them and their relationship. This document provides clarity on expectations between both parties while also protecting each partner’s individual interests in the event of a dispute or separation. With this understanding, couples can move forward with more confidence knowing that their relationship is secure and will remain so throughout the years they spend together.
If you're in a non-married, cohabitating relationship and want to ensure that both parties are protected in the event of a dispute or separation, a cohabitation agreement is an important legal document that can help you do just that. With this agreement in place, couples can feel more secure knowing that their expectations and responsibilities have been clearly outlined and agreed upon.
At the Burch Shepard Family Law Group, we understand the importance of having a cohabitation agreement and are here to help you make sure your rights are protected. Our team of experienced attorneys will work with you to create an agreement tailored to your specific needs, ensuring that all financial expectations as well as roles and responsibilities for both partners are addressed. We can also provide guidance on how to tackle disagreements during the relationship and put strategies in place for avoiding any arguments related to finances.
Contact us online or call us at (949) 565-4158 if you would like more information about how a cohabitation agreement can benefit your relationship.