Could You Benefit From A Cohabitation Agreement?
Every relationship ends at some time. When a couple lives together, sooner or later they will stop living together. Sometimes they separate because one person moves out. Sometimes, the relationship ends because one person dies. No matter what reason causes the end of the relationship, Massachusetts does not recognize any rights for a couple who cohabit without marriage. This means there is no property division of separately owned property. No palimony (or alimony). No rights if your partner is hospitalized. If one person in the relationship sacrifices employment to maintain the home or to care for children, there is no compensation for the lost earning capacity. If one partner dies, there is no right to inherit from the estate. Massachusetts does not allow common law marriage, so no matter how long a couple lives together, cohabitation won’t ever change into a marriage without performing a wedding ceremony. However, Massachusetts does allow cohabitation agreements.
A cohabitation agreement is a contract made by unmarried people who live together or plan to live together to define their relationship. In 1998, the Massachusetts Supreme Judicial Court ruled for the first time that “unmarried cohabitants may lawfully contract concerning property, financial, and other matters relevant to their relationship. Such a contract is subject to the rules of contract law and is valid even if expressly made in contemplation of a common living arrangement …” (Wilcox v. Trautz, 427 Mass. 326, 332)
While the Commonwealth of Massachusetts won’t create protections for cohabitants, the parties can create their own protections by executing legal documents such as a cohabitation agreement and an estate plan. Just as a couple who are going to get married can create a prenuptial agreement, a couple who lives together can create a cohabitation agreement. A well-drafted cohabitation agreement will explain rights and responsibilities for termination of the relationship including termination by death. It should explain how finances will be managed if the couple remains healthy and employed and if one party becomes incapacitated or unemployed. The agreement should address usage of real property and rights in the property if one party dies. This is particularly important if the couple purchases real estate together. The agreement can address personal property and debt division. The agreement can address protections for children of other relationships or children of the cohabitating couple. It can provide inheritance rights.
A cohabitation agreement should be drafted in conjunction with a will, a health care proxy, and a power of attorney. Drafting of these agreements should be done by an experienced family law attorney working with an experienced estate planning attorney. These attorneys should be able to discuss the financial differences between marriage and cohabitation and the limits on protections that a cohabitation agreement and estate plan can provide. Even with a well-drafted agreement and estate plan, there will always be differences between marriage and cohabitation. While a couple should not get married because of the lack of protection afforded cohabitants, it is important that they understand the differences.