The number of couples living together without choosing to get married has more than tripled in the past two decades. Unless the cohabiting couple lives in a state which recognizes common law marriages, living together does not automatically provide them with the legal rights and protections of a traditional marriage. Accordingly, upon separation or death of one cohabiting partner, the law may treat the couple as complete strangers. To prevent such a result, unmarried couples can opt to legally define their relationship by entering into a cohabitation agreement, which will direct a court on how to divide property and assets among the couple.
A cohabitation agreement is a legal contract which defines the partnership of an unmarried couple. The agreement is often necessary to preserve some important legal rights, obligations and protections that an unmarried couple necessarily foregoes. In other words, the privileged legal status of married couples, which is provided automatically through custom, statute and agreement, must be affirmatively contracted into by cohabiting couples. Although cohabiting couples cannot achieve all of the legal benefits of married couples (such as tax benefits), a cohabitation agreement provides a good start in defining the rights and responsibilities of each party.
Cohabitation agreements typically cover the following issues:
- Distributing property in case of death or breakup
- Obligating financial support during the relationship or upon its dissolution
- Handling the payment of and defining responsibility for debts
- Dividing the principal residence upon breakup of the relationship
- Defining support, custody or visitation rights for minor children (although such an agreement is nonbinding)
- Determining the right to serve as guardian/conservator in case of incapacity
- Establishing the right to make medical decisions
Distinction Between a Cohabitation Agreement and a Prenuptial Agreement
A prenuptial agreement is an agreement entered into by two parties in contemplation of marriage. Many states have adopted legislation setting forth specific requirements for prenuptial agreements, but very few states have adopted similar legislation governing cohabitation agreements. A prenuptial agreement becomes effective upon the marriage of the parties, whereas a cohabitation agreement is usually no longer valid if the parties marry.
Enforceability of Express Cohabitation Agreements
In general, many courts have begun to recognize express written cohabitation agreements and are willing to enforce such agreements under state contract law. Some states may also enforce express oral agreements to divide real or personal property, provided there is substantial evidence to show such an agreement actually existed.
For example, upon separation, one cohabitant may be able to prove that they had expressly agreed with the other to share their property equally, by combining efforts and earnings during the relationship. This argument may be strengthened if the couple was together for a substantial period of time or if they have children together. In addition, one partner may be able to state a cause of action against the other for recovery of "palimony," or alimony for unmarried cohabitants.
Consequences of Not Having an Express Agreement
As mentioned, cohabiting couples are generally not automatically afforded the same legal rights as married couples. Thus, without an express written or oral agreement with definite and clear terms, the law might treat an unmarried couple as legal strangers upon dissolution or death. This could have the unfortunate effect of leaving one cohabitant with nothing, even where both parties’ incomes were pooled in joint purchases of property.
In some cases, one cohabitant may be able to establish that there was an "implied in fact contract," or a contract based on the couple’s conduct rather than on an express promise. While responses to such financial claims have been mixed, a few courts have been willing to use doctrines of equity, or fairness, to apportion property and assets in a way that is justified and reasonable to avoid harsh results. In addition, a court may award money to a person who shows that they rendered beneficial services (e.g., household services) to the other with the expectation of being compensated for those services.
Considerations for Entering a Cohabitation Agreement
Courts are generally limited by traditional contract principles to impose legal, financial and other obligations on separating cohabitant couples. Without sufficient express and definite terms of intent, courts may be reluctant to try to accurately discern the parties’ expectations on the basis of their conduct alone. Accordingly, some reasons that cohabiting couples may consider entering into express (written) cohabitation agreements include:
- Guaranteeing that the financially less secure partner receives an equitable settlement
- Allowing the more financially secure partner to limit exposure to potential liability
- Properly compensating a partner as a caretaker
- Disclosing explicit expectations of the relationship
- Discouraging opportunistic and marginal claims