Prenuptial agreements have been the norm for many years now, but recent years have seen the rise of the cohabitation contract. With marriage rates having dramatically decreased over the last few years, many people are choosing to live together first or as an alternative. A cohabitation contract can be used by anyone no matter what their sexuality or gender.
Like any married couple, people that are living together have the desire to protect their interests and their assets. But a cohabitation agreement goes further than that, it can outline the financial responsibilities of both parties and it can even state who performs what tasks around the home.
Someone that has a lot of money that they wish to protect may require a cohabitation agreement, they will have worked hard for their money and may want to protect themselves from any backlash should the relationship end badly. In this sense the agreement is used like a prenuptial agreement, however there is no guarantee that courts will acknowledge the cohabitation agreement, particularly in the UK.
Conversely, an agreement may be written in favour of financial aid and support should the relationship end badly.
Childcare is often included in an agreement, the document will outline the responsibilities of both parties and make arrangements for if the relationship ends or one party dies. People with children would find a cohabitation agreement useful because it gives them a stronger legal standing if things go wrong.
Living with someone with a great deal of debt may mean that you put your property at risk, if you share a bank account, your credit rating could be impacted by their financial score. A cohabitation agreement would protect the debt free party from any negative outcome.
Sharing a house and having both of your names on the property might seem like a good idea at the time, but if the cohabitation breaks down the dispute over who moves out or gets what can be incredibly time consuming and upsetting. A cohabitation agreement would clearly set out who is entitled to what and who would remain in the house.
The main purpose of a cohabitation contract is usually to establish how money and property will be divided if the couple should split up. And whilst it is a legal document, upholding it is done at the discretion of the courts, so trust deeds and wills are often needed to back it up.