No relationship is perfect, and there is no perfect way to start and continue a relationship. While marriage may be an end goal, some couples decide to date for an extended period of time to ensure the relationship will last and withstand the test of time. Because of this, some couples will cohabitate long before being engaged or married. While cohabitation is a norm in California and elsewhere, it could still expose each partner with financial issues if the relationship does not last.
Including a cohabitation agreement in a relationship
Much like a prenuptial agreement protects a married couple in the event of a divorce, a cohabitation agreement provides protections in the event of a breakup. When couples live together, there are shared expenses. This also means that items are purchased for the enjoyment of both partners. Thus, when a relationship ends, disagreements may occur when it comes to who gets what.
Protections provided
A cohabitation agreement could provide many protections. It could detail how specific assets are owned, how income and expenses are shared, the ownership of newly acquired assets, how bank accounts, credit cards, insurance policies and other accounts will be managed, how specific assets will be distributed in the event of separation and how disputes will be resolved if any arise concerning property rights.
Additionally, if the couple purchases a home, a cohabitation agreement could detail how this major financial responsibility will be addressed if they separate. Not only can this agreement detail what will occur with the home, but it can also help promote a more equitable resolution when it comes to dividing up property as a whole.
While no one wants to think about a relationship ending, no one wants to deal with the hardships associated with dividing up assets in the event of a breakup. Thus, it is important to consider how a cohabitation agreement could provide this protection, even if it is never needed.