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  • Writer's pictureKristyn Carmichael

Why Do You Need a Cohabitation Agreement?

Whether you’ve been with your significant other for a matter of days or years, you may be taking the next step of moving in together. While it was common for past generations to marry before they lived together, it has become more and more common for couples to live together before they are married. And this change has come with a lot of positive implications including learning whether your partner is the right fit before making a legal commitment like marriage, to maintaining independence as individuals.


While living together can be an exciting next step, it is important to remember that the legal system has protections in place for married couples, while it often does not for those simply living together. This is where a cohabitation agreement can be beneficial.



What is a Cohabitation Agreement?

A cohabitation agreement is a contract between a couple establishing certain guidelines for their relationship as well as for the end of their relationship, should it ever occur. I understand a cohabitation agreement may not sound romantic or sexy, but it ultimately can prevent a lot of heartache and conflict. A cohabitation agreement is basically setting up the expectations for your relationship, and where possible, is establishing a legal framework.


What do I mean by a legal framework? When you get married, federal and state laws grant protections within your relationship. For example, in many cases, if you are not on the mortgage and deed of your home but your spouse is, the house value would still be divided equally at divorce - even if your name is not listed. This is because the law sees a married couple as a single unit for many situations under the law. Alternatively, a relationship with your significant other, even if you are living with them, does not provide the same protections.


What Can Be Included in a Cohabitation Agreement?

Often, a cohabitation agreement will include expectations for your relationship, with a particular focus on your finances. This agreement will establish:

  • How you share expenses

  • Whether you will combine your finances or keep them separate

  • Who maintains ownership over assets

  • Who is responsible for debts

  • What would happen to your assets and debts should you separate in the future

It can include much more, but these are the basic agreements that typically will be included.


Why Do I Need a Cohabitation Agreement?

These agreements can act as a form of insurance for your relationship, helping you set a healthy foundation while also being protected should a break-up occur in the future. Let me give you an example: I had a friend who was in a long term relationship. Her significant other had purchased a home and she moved in. The home was in his name alone. Since he had the home in his name, she cosigned on a car loan with him so he could get a lower loan rate. She contributed to the rent and the upkeep of the home including improvements. After years together, they ended their relationship. While my friend still walked away with her own bank accounts, car, and retirement, she wasn’t compensated for her contributions to the relationship. She had paid towards a home, including improvements, that her former partner would benefit from. She was still listed as a cosigner on his loan. While he luckily paid the loan on time, she could have been left with his debt. And all of this could have been avoided with a cohabitation agreement.


It is understandable that having such an agreement is not at the top of your list when you move in together. You have to combine all of your things in one space, adjust to each other’s living style, and just enjoy your time together. But to protect yourselves long term, and set up realistic expectations for your lives together, a cohabitation agreement can be invaluable. In the example of my friend, they could have set up expectations from the start about how the home and car would be contributed to. This would have alleviated a lot of conflict around money during their relationship, while also saving them frustration at the time they did break-up.


I commonly get the question - well why do we need a cohabitation agreement if we plan on getting married in the future? And this is a valid question.


First, while you may intend to stay together forever, there is the potential chance that something could happen before then. You can always have a cohabitation agreement that is void upon getting married.


Second, many people assume that when they get married, their time dating prior to marriage is absorbed into the “legal” time they are together. For instance, when considering spousal maintenance, I commonly hear people say they have “been together” for 15 years, but they have been “married” for 10 years. While most people think of their time “together” as the entirety of their relationship, the legal system typically considers it the length of your “legal” relationship - i.e. marriage. This becomes problematic when couples have lived together, then marry, and then ultimately divorce. For example, I had a couple I worked with during their divorce. They had lived together and renovated a home for 2 years prior to marriage. The home was only in Husband’s name. When they got a divorce, there was a strong legal argument that Wife can benefit from the portion of the house that was accrued during the marriage, but not before. This means that Wife could legally miss out on the time and money she put in the house prior to marriage. While she could also argue that she should receive compensation for this time, it is not inherently protected by the law.


Ultimately, a cohabitation agreement can be a mutually beneficial option for setting up expectations in your relationship and ensuring you are both protected in the future - whether you were to stay together forever or separate. Want to learn more? Contact us for a free consultation.


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