A cohabitation agreement is a contract signed by two parties who are living together, or are planning on living together, and who contemplate the division of their assets and debts, and/or support obligations, if a separation and/or divorce of the parties were to occur in the future.
As a couple sets up a household together, each partner may have certain expectations regarding finances and obligations to each other. One partner may expect that each party will retain their own separate property if the relationship were ever to break down, and that neither party will be obligated to support the other. The other party may have the opposite expectation. If the relationship ends, these incompatible expectations can lead to unnecessary stress, conflict and financial burden.
While some couples may try to have an oral agreement, or perhaps an informal agreement, where the parties draft an agreement and simply sign at the kitchen table, there is a good chance that this agreement would not be enforceable on the breakdown of the relationship. To ensure that you have all your issues addressed and the agreement has the best chance of being enforceable in the case of separation, it is best for you to consult with a lawyer regarding your rights and obligations and have a legal professional draft a solid cohabitation agreement. Both parties should also have independent legal advice.
While it may be unpleasant to contemplate the end of your relationship, having a cohabitation agreement helps to manage each partner’s expectations and ensures that both partners are on the same page with regards to how their finances would be impacted if a separation agreement were to occur. If, at the time of separation, there is no formal cohabitation agreement, and the parties are unable to agree on a division of assets and debts and/or support obligations and terms, then the parties may end up each retaining counsel, involving the courts and incurring thousands of dollars in unnecessary legal fees.
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