You’ve heard of a prenuptial agreement, and you know what a separation agreement is. But what is a cohabitation agreement?
More and more couples are choosing not to get married. Statistics show that the number of couples choosing to marry is continuing its downward trend. Even if they do get married eventually, it’s not uncommon for couples to spend years living together before their wedding day. In that time, even if they aren’t aware of it, their legal situation could change dramatically. That means they could get stuck with their partner’s debts or lose some of their own property if they ever do go their separate ways. So how do you protect your assets if you do start living together? Here is where the lesser-known cohabitation agreement comes in.
A cohabitation agreement is a legal document for those who live together without being married. It can give you will have a clear picture of all your assets and debts, and who is responsible for what in the event of your relationship ending.
There are a lot of good reasons to get a cohabitation agreement:
- Real Property: Who should get the family home? Even if you own your own home, without a cohabitation agreement, some of that equity could be lost on separation.
- Pensions: These can be one of your most valuable long-term assets. Do you want to share it if you don’t stay together?
- Businesses: More than just profits, who is going to have a say in your business if you separate? If they are taking voting share with them, you may have to work together long after your relationship ends.
- Investments and savings accounts: Even if you brought the account into the relationship, any appreciation could be split unless you get an agreement that says otherwise.
- Debts: Did you know that each partner is responsible for half of most debts incurred during their relationship? Even if they didn’t know their partner created the debt in the first place. A cohabitation agreement can limit that to just some debts you agree on, or none at all if that’s what you choose.
- Spousal Support: This is a monthly (or one time) payment to the other party, either to compensate them for their contributions in the relationship, or just to help equalize your living standards after you split. How much, and how long are open questions that you can tackle early in an agreement. In most cases it can be possible to waive it altogether.
A big question is “when should you get a cohabitation agreement?”
While it’s recommended to have one before you move in together, the true answer is: whenever you want. You can be living together for many years and it’s still not too late to get a cohabitation agreement. Your decision to move forward with getting a cohabitation agreement may happen due to a change in assets or debts that weren’t there when you moved in together. Perhaps you’re starting a business or taking one over, or your partner is set to inherit a property. Life is always changing, so you decide when the right time is to protect yourself and your partner.
Spend more time nurturing your relationship, while you take comfort knowing that the legal side has been taken care of. It’s a legal document that will provide protection to both parties and is in everyone’s best interest.
If you feel that a cohabitation agreement would bring some added safety and security into your relationship, feel free to book an initial call with a member of the Freedom Family Law team.