How can a cohabitating couple avoid legal claims and property disputes?

This is a growing legal concern because many more couples now live together without marrying. Some want to test their relationship. Older folks may live together because marriage would disqualify them from social security or pensions. Others want to avoid responsibility for the care of an ill partner or the many other legal and financial complications that arise from marriage. These concerns become particularly acute when one party has substantially more wealth.

Cohabitating couples should have a cohabitation agreement to define the couple’s rights to property. The agreement designates each party’s separate property before cohabitation and provides for the distribution of assets acquired both jointly and singly during cohabitation. The cohabitation agreement may also resolve the responsibility for joint obligations, such as leases, utilities or insurance. Several palimony cases demonstrate that cohabitation agreements are as vital for cohabitating same-sex couples as for heterosexual couples.

Cohabitation agreements are also vital if one partner is considerably wealthier. This avoids the poorer partner’s claim that the cohabitation was for personal care and services on the promise of compensation. A cohabitation agreement precisely defines the nature and purpose of the relationship and whether it involves compensation for services.

Related links:

• Estate Planning Considerations for Couples
• How important is asset protection when planning marriage?