Cohabitating Instead of Getting Married? Get an Agreement First! Part 2

{3:18 minutes to read} In Part 1 of this series, I proposed that an unmarried couple enters into a cohabitation agreement if they decided to live together. In Part 2, I outline what they might include in such an agreement.

What a Cohabitation Agreement Should Contain

To begin with, a cohabitation agreement might contain provisions related to how you will divide expenses, such as housing, utilities, food, entertainment and other such costs. For example, will you:

• Divide expenses equally?
• Divide expenses pro-rata according to your income?
• Will one of you pay certain designated expenses? 
• Will you set up a joint bank account to pay some expenses?

In addition, you might want to make provisions about what would happen if one of you became disabled or predeceased before the other, including:

• A provision naming the other person as the Health Care Proxy in the event one of you became disabled;
• A provision requiring each of you to obtain and maintain a Long-Term Care policy;
• A requirement that you maintain life insurance with the survivor as beneficiary;
• A provision requiring each of you to prepare a will leaving any assets acquired while you were together to the survivor;
• A provision designating the survivor as the guardian of any children of the relationship.

Finally, a cohabitation agreement might include any issues that would need to be resolved if you decided to stop living together, including:

• Would one of you be allowed to stay in the house or apartment you lived in together?
• If so, how will the other be compensated?
• How long would the one who is leaving have to find another place to live and move out?
• How would each of you be reimbursed for any assets that were purchased while you were together?
• How would you divide any assets or liabilities you acquired together?
• How will you parent and/or support a child of the relationship?
• How would you divide any funds in a joint bank account?
• Would either of you receive support from the other to compensate for any losses you suffered by leaving the workforce to raise a child?

Because these are sensitive topics, especially when you are first planning on living together, I believe the best way to create such an agreement is in mediation.

Mediation allows each of you to express your expectations for the relationship and how you view your future. From that discussion, decisions can then be made that will help you not only avoid a costly court battle if your relationship sours, but to go into the living arrangement with your eyes wide open.