Why You and Your Partner Should Consider a Cohabitation Agreement

small picture of attorney bill henry
By: Bill Henry
PublishedJul 21, 2022
6 minute read

We all need love, but marriage isn’t for everyone. If you and a significant other are living together, have you thought about how you will each protect your own assets if the relationship ends? How will you divide property and debts? What if one of you dies? These are hard questions at the best of times, but they can be overwhelming at the wrong time. A cohabitation agreement can address these kinds of what-ifs and give the two of you peace of mind.

The Bottom Line 

Hope for the best. Plan for the best. But make sure you and your partner are protected if things don’t turn out for the best.

In This Article

We Can Give You Peace of Mind

Any cohabitation agreement signed by both you and your partner will hold up in a Colorado court. However, many couples overlook key issues and important details. A Robinson & Henry family law attorney has the experience and depth of knowledge to explain all your options and help you craft a thoughtful and enforceable cohabitation contract. Call 303-688-0944 for your case assessment, o lláme al 720-359-2442 para hablar con alguien en español.

cohabitation agreement

What is a Cohabitation Agreement?

A cohabitation agreement is a legally binding contract signed by two people who live together. It lays out how you and your significant other will divide assets, property, and financial responsibilities during the relationship — and if it ends.

A cohabitation agreement can help you and your partner settle big issues like:

  • how to divide up the rent and other household expenses and purchases
  • whether you will keep your finances separate or open a joint account
  • who gets what if the two of you split up

A cohabitation agreement has also been referred to as a non-marital contract, co-tenancy agreement, or a “no-nup.”

What is Cohabitation?

Cohabitation is defined as two people living together in a committed relationship as if they’re a married couple, regardless of their sexual orientation.

Why Get a Cohabitation Agreement?

Even if you’re not married, sharing a home with your romantic partner is still a big step, one that comes with its own risks and complications.

Married couples automatically share any property, assets, or debt they acquire while together, and these are divided fairly between them if their marriage ends.

Unmarried couples are not automatically entitled to a fair division of assets if their relationship ends, no matter how long they have lived together — unless they have drafted a cohabitation agreement.

A cohabitation agreement can also cover issues pertaining to estate planning, medical care, and inheritance, especially when paired with a power of attorney document.

Who Needs a Cohabitation Agreement?

Any serious couple who has no plans of getting married but would like to live together can benefit from a cohabitation agreement.

Note: If you and your partner are sharing a residence and considering marriage within a few years, you should wait and perhaps discuss a prenuptial agreement instead. A cohabitation contract cannot be enforced in place of a prenuptial agreement.

Still, if you and your significant other fall into one of the following categories, you should start the process of completing a cohabitation agreement together.

Couples ‘Just Living Up’ 

Any couple living together with no plan to get married should complete a cohabitation agreement.

Since you share a residence, you’re probably splitting the cost of rent, utilities, and food anyway. Over time, it’s likely you’ll comingle financial assets and responsibilities more like a married couple while accumulating shared possessions. You could even have children or pets together.

A cohabitation agreement makes clear your agreed-upon division of these things in case you break up. One of the benefits of cohabiting and not being married is that you can divide property any way you like, if you break up, as opposed to dividing it according to your state’s divorce laws.

Couples in a Common Law Marriage 

Many couples who have lived together for a long time present themselves as ‘married’ without having an actual marriage license. They can even share the same last name.

If you and your significant other have lived together long enough to consider yourselves married, Colorado courts might go along with it. A common law marriage sometimes is given the same rights and protections as legally married couples. But only sometimes.

A cohabitation agreement can nail down that extra band of protection, should the court refuse to recognize your common law marriage after a breakup or one partner’s untimely death.

Older Couples with Shared Assets and Property

Older adults tend to have more assets and complex financial circumstances. Therefore, such couples could greatly benefit from a cohabitation agreement and should seriously consider one.

Cohabiting partners are not considered heirs under the law, no matter their age or financial status. They also do not have the same rights as married spouses to make medical care decisions. Therefore, in addition to determining how they’ll share and divide living costs, they must also consider health care, estate planning, and who inherits their assets and property when they pass away.

Why Older Couples Choose to Live Together

Many older couples choose to cohabitate after the death of a previous marriage partner. Part of it is to keep the deceased spouse precious, but there are practical concerns as well. They might not want to give up the deceased spouse’s retirement pension by remarrying, nor lose access to Medicare or Medicaid benefits.

How to Prepare a Cohabitation Agreement?

Being prepared for what happens at the end of your relationship is not the same as expecting it to end. Each partner should recognize that you both gained assets, took on financial responsibilities, and acquired valuable possessions before you became a couple and moved in together.

As the two of you start to put together your cohabitation agreement, you need to understand what each is bringing into the relationship, and what more the two of you could accumulate while together.

Start by following these steps:

1. List Your Estate, Assets, and Debts 

Be upfront with each other about what payments you’re making and to whom. List each partner’s income and estate, if applicable. Discuss whether you will be buying an automobile together, and so on.

2.  Discuss Inheritance 

This applies to couples in more advanced age and or financial circumstances, but it’s still an important step. What will happen to all the property in your relationship if one partner dies? Be as thorough and detailed as possible in this step to save yourself or your significant other from court proceedings later.

3. Consider Your Children

Who becomes financially responsible for your kids – or your partner’s kids – in case of a tragedy? If one or both of you had children with a different partner before moving in together, then the other parent can probably handle them. Even so, outline how to use the other parent’s financial support if the children will continue to live with the surviving partner.

4. Retain Unbiased Legal Counsel 

Putting together a cohabitation contract does not require expert legal knowledge. However, it is still a good idea to have a knowledgeable attorney examine your agreement document to make sure you haven’t overlooked anything important and to ensure it will hold up in court.

What Should a Cohabitation Agreement Include?

A cohabitation agreement can include as much or as little detail as you and your partner want, but it should at least cover these basics:

Division of Property 

This part of the agreement establishes how you and your partner will share ownership of certain items and accounts acquired while living together. These can include:

  • a house or lease on a condominium or apartment
  • one or more automobiles
  • furniture, appliances, and expensive valuables
  • bank accounts and investments

Next, what happens if you break up? How will the property you shared be divided if you decide to go separate ways? You can agree to mutually own everything together, then split it equitably, as in a divorce, if you break up. You can also maintain separate finances and assets as much as possible, then each of you simply walks away with what they came in with.

Whatever you and your partner decide, it must be put in writing.

Division of Debts

This section of the agreement details how you will share responsibility for loans and debts, especially those you take out in both partners’ names. You can also address any debts each partner has brought into the relationship. Will you pool your incomes to help pay off existing debts one or both partners incurred before moving in together?

Who becomes solely responsible for which debts if you split up? Get it in writing.

Division of Expenses

One of the biggest reasons to get a cohabitation agreement is to establish, without doubt or future debate, how household expenses will be shared. These can include rent, utilities, groceries, insurance, and any other bills.

Here are some common scenarios of how expenses are shared:

  • The two of you rent a home and evenly divide all expenses.
  • One partner moves into a home owned by the other and agrees to pay half the utilities while contributing a fair market value amount each month as rent.
  • One of you pays all the living expenses while the other maintains the home and cares for shared children.
Division of Inheritances 

If you and your partner are older, then it is wise to plan for end-of-life matters, such as medical care decisions, funeral arrangements, and ensuring that one partner can remain in the home after the other dies.

This is an important arrangement to get formalized, otherwise, the deceased partner’s next-of-kin could inherit the property by default and force the surviving partner to seek another place to live.

Protect Financial Interests 

Colorado has recognized that couples from various backgrounds and lifestyles choose to live together without getting married. To that end, it passed The Colorado Designated Beneficiary Act to strengthen financial protection options for cohabiting couples.

The 2009 law, revised with new statutes in 2015, allows unmarried couples, straight or gay, to designate each other as intended beneficiaries in the event of death, and to grant other rights and protections through a Designated Beneficiary Agreement (DBA).

A Backup Plan 

A DBA operates in the absence of other estate planning documents. Other valid estate planning documents, such as a will, trust, or medical power of attorney, overrule the DBA wherever they conflict. Moreover, while a Designated Beneficiary Agreement expresses one partner’s intentions, other documents might have to be executed to fulfill those intentions.

Still, a DBA is better than nothing.

Deal with the Uncertainty Now, Not Later. 

Every relationship eventually ends, either by a breakup or by one partner passing away. Refusing to prepare for either scenario only makes it more worrisome. A knowledgeable family law attorney can discuss what’s most important to you and your partner and then ensure the cohabitation agreement is drafted to be both thoughtful and legally binding. Don’t let uncertainty hang over you and your live-in partner. Call 303-688-0944 for your case assessment, o lláme al 720-359-2442 para hablar con alguien en español.

More Than Just Lawyers. Lawyers for Your Life.

Learn more about our law firm’s philosophy and values.