This week, CNN Money reported on the growing number of unmarried couples who are entering into cohabitation agreements. These legally-binding contracts are similar to premarital agreements except that they are not based on a marriage.
A cohabitation agreement is typically drafted by a family law attorney and can address everything from assets to debts to support obligations, CNN reported. Cohabitation agreements are gaining popularity as more couples than ever are choosing to live together but not marry.
In fact, a poll conducted last year by the American Academy of Matrimonial Lawyers found that 39 percent of divorce attorneys said they saw an increase in cohabitation agreements over the past five years. Interestingly, 70 percent said that a majority of the cohabitation agreements were executed by heterosexual couples instead of homosexual couples.
Perhaps the reason for the increase in cohabitation agreements has something to do with the fact that about half of the 1,600 divorce attorneys polled by the AAML reported seeing an increase in court battles between unmarried couples who had lived together.
According to the Pew Research Center, a record low number of American adults, just 51 percent, are choosing to get married these days. Instead many couples are choosing to buy a home together, have children and share expenses all without tying the knot.
The trouble is that without a marriage, the couple is not protected by the law, so when they break up they have many fewer rights. A cohabitation agreement, when executed properly, works to establish rights in these relationships.
For example, if cohabitating couple has children together and one partner sacrifices his or her own career by staying at home with the children, a cohabitation agreement could potentially provide for maintenance in the event the relationship ends.
Ultimately, cohabitation agreements are a must for couples who share their homes and lives together but aren't legally married.
Source: CNN Money, "Prenups aren't just for married couples anymore," Jessica Dickier, March 20, 2012