Not only are fewer Americans choosing to walk down the aisle, but divorce rates have also hit an all-time low. In 2019, for every 1,000 Americans, only about 33 married a spouse. The statistics are even starker for divorcing couples, with only 14.9 out of every 1,000 married couples calling it quits in 2019.
While there are many theories to explain the drops in marriage and divorce rates, one thing is clear: A growing number of couples live together without marrying. If you have a significant other and do not have the rights and responsibilities of marriage, you may benefit from a cohabitation agreement.
What is a cohabitation agreement?
A cohabitation agreement is similar to a prenuptial agreement, as it outlines what happens to assets and debts at the end of the relationship. It may also cover each person’s responsibilities to the other and to the household. While not everyone needs a cohabitation agreement, this type of contract often makes sense for unmarried couples who live together and have commingled finances.
What items can you include in your cohabitation agreement?
If you are thinking of drafting a cohabitation agreement, it may be beneficial to seek the assistance of an experienced family attorney. After all, your agreement does not do you much good if it does not pass legal muster.
Regardless, you may want to address the following matters:
- The assets each person contributes
- The assets each person keeps separate
- The assets each person inherits or receives as a gift
- The joint debt you acquire as a couple
- The individual debt you each have
- A process for resolving disputes
Despite what other Americans are doing, you eventually may decide to marry your significant other and render your cohabitation agreement void. Until then, having a binding agreement in place may be the most effective way to protect your personal, financial and legal interests.