When people are preparing to marry, it is often in their best interest to draft a premarital agreement, particularly if they have a lot of assets. Nowadays, 60 percent of couples live together before marriage, compared to just 10 percent in the late 1960s. And many who have no plans to get married are entering into cohabitation agreements.
They essentially work the same way as prenuptial agreements. They are contracts, which are legally binding, usually drawn up by attorneys. They address similar issues as prenuptial agreements, including child custody, support and assets.
39 percent of attorneys reported seeing an increase in cohabitation agreements over the last five years. In addition, about half of those polled said that about half of the issues they saw go to court involved live-in couples who were not married.
If a couple intends to build a life together without getting married, including buying a home and having children, it makes sense that these agreements are becoming more common. If a person doesn't want to be liable for their ex-partner's student loans or credit card debt, such an agreement can be a good tool for protection.
States generally do not have cohabitation laws, which makes issues surrounding breakups among live-in couples somewhat fuzzy. Cohabitation agreements can draw a clear line as to how assets should be divided when a couple decides to split up. And as with premarital agreements, they can potentially save estranged couples time, aggravation and money.
Source: CNN, "Prenuptial agreements aren't just for married couples anymore," Jessica Dickler, March 20, 2012