Using a Cohabitation Agreement to Determine Property Rights for Unmarried Couples

A cohabitation agreement can be a valuable tool for unmarried couples to determine their property rights and financial responsibilities in case of a separation or death.

As marriage rates continue to decline, a growing number of adults are likely to live or have lived with an unmarried partner, often either before marriage or with no plans of getting married in the first place. However, as detailed time and time again in other fields of law, the legal landscape is slow to adjust to the realities of social progress. There are very few inherent rights given to unmarried couples, unlike married ones.

In fact, the legal benefits (and tax advantages) of marriage remain one of the key reasons couples choose to continue to get married today, even if they don’t plan on raising children together. Furthermore, the law is still mostly centered around the idea of the nuclear family, despite the growing popularity and prevalence of blended families, such as unmarried couples who live together with their children from past marriages.

In effect, this complicates questions of ownership and inheritance. While it’s clear that a spouse inherits the majority of a person’s assets in death, including their community property (in community property states) and up to half of their separate property without the need for a will or other form of estate planning, there are few circumstances under which the long-time unmarried partner of a decedent would be able to automatically inherit the home they lived in together, let alone their loved one’s personal belongings or assets. Then, there’s the matter of a divorce versus an informal breakup. Legally recognized domestic partnerships and marriages have the protections of their respective legal bonds to help determine asset allocation in the event of a divorce or separation. But unmarried couples don’t have this protection.

If you live with someone you love, and raise children together, yet haven’t been married or signed any formal adoption papers for your stepchildren, then you will need a comprehensive estate plan to ensure that your assets are bequeathed to your closest loved ones, rather than your next of kin by blood. For unmarried couples, one of those potential estate planning documents is the cohabitation agreement.

What is a Cohabitation Agreement?

A cohabitation agreement effectively outlines what should happen in the event of a breakup or the death of a partner for an unmarried couple that lives together. It is a legal document, much like a prenuptial agreement or a marriage contract, but focused specifically on discussing the aftermath of a split or death in the relationship.

The main purpose of a cohabitation agreement is twofold. First, can help prevent legal battles by putting a couple’s priorities and interests in print, explaining who gets what should a breakup occur, and pre-empting the potential heartbreak and frustration of dividing assets after separation. Second, it allows couples to discuss and outline their wishes regarding property, debts, and children, should they pass away.

It is important to note that a cohabitation agreement is rarely ever a substitute for a will. While the two documents aim to achieve similar goals, cohabitation agreements may not be admissible in a probate court or may not be recognized depending on the exact legal jurisdiction. What a cohabitation agreement does serve as is a legally valid document outlining a person’s wishes.

If someone died and left behind no will, then their cohabitation agreement could be used to support an unmarried partner’s claim to certain assets, even if it does not force a court’s hand. Similarly, if a cohabitation agreement was created after the decedent’s will, and contradicts the will, then it could be used to support the argument that they wished to distribute certain assets to their partner rather than the outlined plan in the will.

Cohabitation Agreement vs. a Will

A last will and testament is a legal document that provides the basis for a person’s wishes for how their assets should be distributed in death. When a person dies, anything left behind not already accounted for (via direct transfers, gifts, designated beneficiaries, or transfer into a trust) must be distributed among the living via the probate process.

Probate begins following a petition, filed using the decedent’s death certificate. In the early stages of probate, the court appoints an executor to assume responsibility over the evaluation and management of the estate, the resolution of final debts, bills, tax returns, and costs, and the distribution of remaining assets. If and when a will exists, the probate court can legitimize the will, upon which it serves as the executor’s instructions.

The key difference between a cohabitation agreement and a will is that one is an agreement between two people, while the other is a set of instructions left behind for the living to follow as best they can.

As a rule of thumb, a person signing a cohabitation agreement with their loved one should ensure that the goals of the agreement are also duly reflected on their will, to avoid confusion, and to ensure that their partner receives what they are entitled to in the end. Rather than choosing between one or the other, it’s a good idea to create both.

Cohabitation agreements allow a couple to split assets and legally handle the aftermath of a breakup, but they may not be accepted as a substitute for a will under certain circumstances. Furthermore, while cohabitation agreements might offer a suggestion for guardianship, a will is a much more appropriate document to outline who should take care of your children in the event of your untimely death.

Creating a Cohabitation Agreement

There are several steps involved in creating a cohabitation agreement. Here’s what you should know:

This is a two-person agreement. Meaning, both people must be fully aware of the terms of the agreement and must be in complete accord before it can be made official.

As a legal document, it is important to get every detail right, especially if you aim to stay together in a specific jurisdiction or area for a long period. Be sure to hire a local lawyer with experience in family law and local inheritance laws, to ensure that your cohabitation agreement accounts for individual state or county differences.

Once you agree and have found the right lawyer, it’s time to draft the document. As with a will or a trust, a DIY approach or an online template is inadvisable.

Both partners should review the final document with a lawyer present before notarizing it. This will ensure that it is as enforceable as possible.

A cohabitation agreement can be one part of a comprehensive estate plan for unmarried couples living together. But it is important not to treat it as a replacement for a will or a trust, especially when it comes to bequeathing behind assets after death, or assigning guardianship.