Millennials are waiting longer than their parents did to get married and baby boomers are taking a second (or third or fourth) chance at love. Whether you’re putting marriage off or you simply don’t want to get married, getting a cohabitation agreement can be a smart financial move.
Along with establishing how finances will be handled during the relationship, cohabitation agreements are especially beneficial when one or both of the parties enters the relationship with sizable assets. In Texas, these contractual agreements can be used to:
No. 1: Disprove common law marriage.
In Texas, a couple that cohabitates faces the risk that their relationship will constitute common law marriage, unless they mutually sign a written agreement stating that they are not married. According to Texas law, the following three requirements must be met in order to constitute common law marriage:
- There is an agreement between the two parties that they are married;
- The couple lives together as husband and wife; and
- The couple has presented themselves to other people as husband and wife.
Since Texas is a community property state, any property, earnings and debt acquired during the relationship may be subject to division by a court of competent jurisdiction if the court decides a common law marriage exists. By mutually signing a cohabitation agreement, you can avoid the entanglements of common law marriage.
No. 2: Clarify financial obligations during the relationship.
While this is one of the key reasons to get a cohabitation agreement, there are many financial concerns people don’t think about before moving in together.
First, it’s important to spell out who will cover what expenses and for how long, such as:
- Household expenses (rent/mortgage, association dues, utilities, repairs, etc.)
- Car payments and repairs
- Insurance (home, auto and health)
- Pet food, care and vet bills
- Club memberships and dues
In relationships where a monied party will cover the majority of the expenses, the cohabitation agreement can also include provisions for the non-monied spouse, including:
- A “signing bonus” at the outset of the agreement
- Monthly spending budget for miscellaneous expenses
- Shopping budget
- Guaranteed date nights
- Requirements pertaining to wills, trusts, life insurance, etc.
No. 3: Define who gets custody of the pets.
Though you may consider your fur baby to be a member of your family, the state of Texas views pets as property. However, judges will consider legal agreements that explicitly spell out who will take custody of – or own – the pet should the relationship dissolve. If you want to ensure you maintain custody of your pets, be sure to include those wishes in your cohabitation agreement.
No. 4: Set the rules for disengagement should the relationship end.
Cohabitation agreements can help eliminate confusion and minimize stress related to a messy breakup, because both parties will know where they stand financially and otherwise. The rules for disengagement may include:
- How assets or property acquired during the relationship will be split.
- Who will be responsible for debts, such as credit cards and other monies owed.
- How joint financial accounts will be handled, closed, money distributed, etc.
- Who will have to move out of any shared residence and when.
- What financial support (if any) the monied party will provide to the non-monied party, as well as under what circumstances the support would be paid (i.e., if the monied party instigates the breakup).
No. 5: Provide peace of mind.
There are a number of ways a cohabitation agreement can provide peace of mind to the parties involved. For example, if you are the non-monied party, your cohab could establish what money and/or assets you will receive in the event of a split or even death. For the monied party, disavowing a common law marriage can help ensure you and your family members’ assets and heirlooms stay in the family. Finally, if you have a cohabitation agreement, it’s much easier to make a clean break because many considerations have been figured out in advance.
Contact a reputable family law attorney for guidance
Cohabitation agreements can cover a wide range of financial concerns and protections, depending on where you live. For details pertaining to your individual circumstances, contact a family law attorney in the jurisdiction where you reside.
Since founding Connatser Family Law in 2013, Aubrey Connatser and her team have firmly established the next in a line of great Texas divorce and family law firms. To learn more about divorce and child custody in Dallas and Collin Counties, please call 214-306-8441 to speak confidentially with a knowledgeable and compassionate member of the Connatser Family Law team.