While you may know that a Will is the legal document that determines who will receive certain assets you own following your death, you may be wondering what exactly is a cohabitation agreement, and how it differs from a Will?
In many cases, an individual will opt to leave certain assets to their surviving spouse following their passing. However, for couples living together but are not married, setting up a cohabitation agreement can be helpful. A cohabitation agreement is a legal document between two individuals who are unmarried but live together. This document will cover what happens to assets, debts and property should the couple either break up or one of the individuals passes away.
Is There a Standard Cohabitation Agreement?
Much like a Will, a Cohabitation Agreement between you and your partner will depend on your specific life circumstances, such as what assets exist and if there are children involved, whether they are your biological children or children under your care, such as those from a previous relationship.
What is the Difference Between a Cohabitation Agreement and a Will?
While there are similarities between the two, a Cohabitation Agreement and a Will are not the same document. A Cohabitation Agreement will address how jointly-owned property is to be divided should you and your partner split up or one of you passes away, while a Will is a much more comprehensive document. A Will allows for you to leave assets to whomever you please, in addition to addressing other key areas such as guardianship that a Cohabitation Agreement does not.
Cohabitation Agreement vs. Will: Which One Should You Have? Do You Need Both?
While many similarities exist, and some key differences, both a Cohabitation Agreement and a Will are essential parts of an estate plan. While a Cohabitation Agreement is very helpful in determining the distribution of jointly-owned assets and property should you and your partner break up or one of you passes away, the document does not address everything that a Will does – making it helpful to have both.
A Will is a more extensive document that will cover the distribution of other components of your estate that a Cohabitation Agreement does not. Examples include any personal property that you would like to give to your children and who should be guardian of any minors in your care should you pass away.
How Do You Know if You Need a Cohabitation Agreement?
Not every relationship requires a cohabitation agreement. However, if you are living together with your partner for many years, and intend to do so for the foreseeable future, creating a Cohabitation Agreement can be worthwhile.
What Should Be Included in a Cohabitation Agreement?
As referenced above, not every Cohabitation Agreement will be the same. In general, the list below covers some of the aspects you should think about:
- Property acquired during the relationship
- Property acquired prior to the relationship
- Gifts received during the relationship
- Expenses accrued during the relationship
- Separation and/or death of one of the partners
- Potential disputes
Property Acquired During the Relationship
One of the most important aspects of a Cohabitation Agreement is property that has been acquired during the relationship. Is the property split 50-50 between the two individuals, or does one of the partners own the property, etc.
Property Acquired Prior to the Relationship
It is a good idea to make clear the ownership of any property from prior to the relationship.
Gifts Received During the Relationship
Much like the property mentioned above, does one of the partners want to keep a gift as separate property? Or should that gift be jointly owned?
Expenses Accrued During the Relationship
How should expenses be paid? Should the expenses be split between the partners, or should expenses be paid off in another arrangement?
Separation and/or Death of One of the Partners
Define what should happen if the couple should break up or one of the partners passes away.
Potential Disputes
If a dispute were to arise regarding property, it can be helpful to decide how that dispute should be resolved legally.
For assistance creating your estate plan, contact us today. For more information regarding various estate planning topics, view our previous blog posts.
