With many couples choosing to live together these days, it may be in their best interests to draw up a cohabitation contract; in the eyes of the law, common-law spouses/partners do not have the same rights as legally married couples. However, a cohabitation contract should not be confused with a prenuptial agreement. While terms of a cohab tend to be more general in nature and is not valid once a couple decides to marry, a prenup goes into effect upon marriage. Even though there are few laws governing the state of cohabitation, many states however prescribe very specific requirements when writing up a prenup agreement. Why might someone want a cohabitation contract?
First of all, modern life is such that no matter how wonderful and happy you may be in an intimate relationship, things and people do change; unexpected events like serious illness or death does occur; a breakup or dissolution of a partnership can come about. Before these things happen, it is in the best interests of both parties to be protected. The intention of a cohab is to put your relationship into perspective, and to examine what your expectations are in case of breakup.
You may want to draw up a cohab to protect yourself from a “palimony” suit if your relationship should dissolve. Your common-law spouse may claim you had promised to support him/her no matter what happens to your union. Although this may only be a verbal promise, the courts can be sympathetic towards their suit; in most states, cohabitation agreements are enforced when it comes to ownership of property. While married couples who divorce have many rights as far as property settlement, spousal support, survivor benefits, social security, retirement plan, etc., common-law couples can only claim such benefits if there is a cohabitation contract.
Furthermore, if you die without a will and there is no written cohab, your property generally goes to your next of kin and not to your common-law spouse. Conversely, without a cohab, the courts could decide to give certain items to your partner, things you had not intended to give. To prevent hardship for your partner, the courts may also decide to divide your assets in half, 50% going to family and 50% to your surviving spouse, under the “equitable doctrine” law. As such, these laws are often quite vague when it comes to cohabitation, so certainly, having a contract drafted is of utmost importance, as you want to have some control of your estate upon death.
When writing a cohabitation agreement, make sure you cover the following areas: in case of breakup, you should decide whether a partner will be supported; how property will be distributed upon divorce or death; how the paying of debts will be handled. If you want your partner to stay in the house after your death, you must both have your names on the deed with a clause stating “joint tenants with rights of survivorship”. If there are children involved, you may also want to define custody or visitation rights with reference to minor children, but this term is nonbinding.
Again, to protect you and your common-law spouse, you need to be specific about health insurance coverage; in case of emergency, you may want to draft a “healthcare proxy” so your partner can make decisions regarding your health care. Furthermore, do you want your partner to become a guardian should you become incapacitated? Do you have the power to make medical decisions if your partner becomes permanently ill?
The decision for a couple to live together is certainly a happy one, but you have to be realistic. Having a cohabitation contract in place will give you both peace of mind, outlining your expectations in case of dissolution of your relationship. If there are many assets involved in this union, you may both want to hire your own lawyer, so neither can claim unfairness or being under duress when signing an agreement. Hire someone who is familiar with the cohabitation laws of your state. If you do break up, at least your claims will be enforced by a court of law.