Monday, March 16, 2009

Cohabitation Agreements - Part 1

With more and more couples choosing to live together instead of getting married, it is increasingly common for unmarried partners to have a Cohabitation Agreement in order to ensure that their intentions and expectations are clear and, if necessary, enforceable. Obviously, you don't need a contract if you have no assets or are in a brief relationship. But, in a long-term and serious relationship, whether you're planning on moving in together or you've been cohabiting for many years, a “cohab” can be just as necessary, if not more so, than its more famous cousin, the prenup.

As you set up a household together, each of you has certain expectations regarding your finances and your obligations to each other. You may expect that each of you will retain your own separate property, and neither of you will be obligated to support the other. Your partner may have the opposite expectation. If you and your partner break up, these conflicting expectations can lead to tremendous distress and unhappiness.

In New York, unmarried couples – gay, lesbian, and straight – do not automatically get a legal framework that governs their relationships. When they break up, unmarried couples are afforded no protection under New York’s Domestic Relations Law. There is only limited relief available (i.e., child support) in Family Court. Unlike other states, New York does not recognize either common law marriage or palimony. Particularly with respect to property rights, the aftermath of a break up or the death of one of the parties can be more devastating to an unmarried person than to a similarly situated person who is married.

Although New York courts can adjust property rights on divorce in order to reach a result that is fair to each of the parties, the situation is far different for unmarried couples. When unmarried partners split up, a judge can only determine who owns what property and in what shares based only on the parties’ actual contributions and/or intentions. When the chips are down, it may be difficult to prove actual contributions, and either or both of the parties may have honestly forgotten (or conveniently forgotten) their original intentions.

If you are planning to mix assets or share expenses, it makes sense to put your agreement in writing, especially if significant money or property is involved. A cohab can provide the framework for unmarried couples to confirm their intentions and record their respective contributions. The sooner you agree on how to share your property while you are together and how to split it should you break up, the less confusion and aggravation you are likely to face later.