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Cohabitation Agreements

A cohabitation agreement is an understanding between two unmarried persons who live together as to how they have agreed to treat their individual assets and how they agree to manage, control, acquire, and dispose of assets in the event the relationship terminates. The advantage of a cohabitation agreement is that, if properly drawn, it will reduce the stresses that would be involved if the cohabitation relationship terminates.

Contract

Although many states do not recognize cohabitation agreements as such, all states recognize written contracts that comply with public policy and clearly identify the parties’ intent. As in any contract, parties will be bound by the terms of the agreement, subject to the usual contract defenses, including fraud.

Schedule of Property

A written cohabitation agreement should be entered into after the parties have fully disclosed to each other all of their assets and liabilities. This means that each party should create a document that lists all of their assets and liabilities and exchange the documents with each other. The documents can be attached to the agreement itself as a schedule of property.

Distribution of Property

The agreement should clearly state in as much detail as possible what will happen to the assets and liabilities if the relationship ends. Although a cohabitation agreement is a contract that is binding on both parties, any experts suggest that each party also provide for the disposition of separate property in a will

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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