A client recently advised me that her daughter became engaged and the couple plan to marry in the near future. As the intended couple have only known each other briefly, she further related her belief that the couple should in the interim cohabitate to better understand one another; and, she asked me about the complications thereof. I suggested, in part, their use of a cohabitation agreement.
If you are acquainted with an engaged to be married individual, who is about to embark on a first marriage, the likelihood is that he or she is living with the fiancé. This is especially true for Millennials, and certain reports provide that the percentage living together is 65%, whereas fifty years ago it was closer to 10%. Less than half of all households in the United States are husband and wife households.
For these unmarried individuals living together, there are practical reasons and benefits including, but not limited to, romance, budget, and exposure of conflicts. Who performs the house work, manages the money, and/or has which parenting responsibilities? It has been reported that approximately half of the people cohabitating for the first time go on to marry; and that couples who move in together before getting engaged or committing to marry are more likely to have lower-quality marriages. Also, many more same-sex couples are cohabitating and combining their property without the benefits, obligations, and legal presumptions of marriage. Same-sex couples have the right to marry in Michigan as a result of the 2015 United States Supreme Court decision of Obergefell v Hodges, but that does not mean they will.
Cohabitation is increasingly becoming a permanent living arrangement for couples who do not want the legal relationship that marriage presents. Unmarried partners living together are best protected from financial harm by a written agreement that details property and support rights upon death or separation and at breakup of the relationship. Cohabitation agreements will generally be enforced in the same manner as a prenuptial agreement is implemented in the state where the agreement is executed. Therefore, both parties should have the assistance of independent legal counsel who will address such formalities as: consideration, disclosure of each party’s financial information, fairness and time for reflection. In the event a couple later decides to marry, the cohabitation agreement may become the basis for an actual prenuptial agreement.
Certainly it is best for a couple to discuss what living together means for them, and to develop a contingency plan. While cohabitation is a means of learning whether the couple is compatible, in the event of dissatisfaction, there are inherent issues as to when and how to leave the relationship. Frequently, the parties in the relationship have an imbalance of power, which makes the dissolution more emotionally and economically damaging, especially if there are minor children. Accordingly, a cohabitation agreement provides some protection. Through the use of such an agreement, all issues pertaining to the parties’ rights and responsibilities can be addressed. If one’s partner refuses to enter into a contract, a person should reflect upon whether to enter into the partnership.
Couples may or may not have an agreement on how matters of money, property, expenses, debts, support and child rearing may be handled. They may have retirement plans, insurance policies, wills, trusts, and other contracts and therefore could benefit from estate and tax plans. The death of a partner, or if the relationship otherwise terminates, will test whether a resolution of legal issues can be achieved or whether the courts will provide relief. Michigan law often prohibits the courts from taking jurisdiction over these couples. Parties who are living together are not granted greater rights than other civil litigants. Generally, the courts in Michigan will grant relief when the cohabitation agreement is express and based on independent consideration and will recognize a contract implied in fact. However, Michigan courts have not provided broad relief, such as equitable relief. Express written agreements are enforced as contracts, but oral agreements are difficult to prove and are without sufficient legal precedent. A written agreement will assist the court in determining the specific agreement of the parties.
Therefore, cohabitating couples without the benefit of marriage should consider naming the other party as the co-tenant on real property, and perhaps even the beneficiary on one’s life insurance policy. They should also memorialize their property and support agreements to writing with the assistance of a family law attorney, as well as consult with a qualified estate and tax planner to assist in developing an estate plan. Each partner’s needs, abilities, expectations, and special circumstances must be considered. The assisting professionals must know the law of the state where the agreement is entered into, but couples have to understand that there are potential hazards if the laws change or the couple relocates.