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Should You Sign a Cohabitation Agreement With Your Partner?

August 20, 2020 · 4 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Should You Sign a Cohabitation Agreement With Your Partner?

First comes love. Then comes marriage. Well, not necessarily. Love then marriage then babies isn’t exactly the natural or only path anymore. With the continuing movement away from the typical kind of escalatory relationships your parents might have touted, moving in with a non-married partner is increasingly becoming the reality.

While you may not be married, sharing a space with a partner is an important life milestone, and one that doesn’t come without its own risks—both emotional and financial.

Without the formal marriage (but, fortunately, without the debt that often comes with a lavish wedding celebration!) you may worry that your relationship and your investment in a life together will not be protected under the law. Luckily, this is not the case.

What is a Cohabitation Agreement?

A cohabitation agreement functions similarly to a prenup for your shared living arrangement in a romantic partnership. Couples that are moving in together—whether they’re heterosexual, homosexual, polyamorous, or otherwise—can, depending on the state, receive benefits and protections similar to those of a married couple.

This can extend to applying for a mortgage, organizing child support, guaranteeing a mutual payment of a lease, or mandate the shared costs of utilities. The agreement can cover how and what kind of mediation will occur in the case of a dispute and can protect personal vs. communal property.

Many couples, whether traditional or not, discuss sharing finances and financial responsibilities when combining homes and lives.

Asking for a cohabitation agreement can be a natural part of this conversation to add legal protection to your financial and lifestyle merge no matter what stage of your lives you are in when entering into the partnership.

But Does Signing the Cohabitation Agreement Make You a Cynic?

Well, some might say so. But how cynical can it be to protect your property in a financial situation that is not only fraught with love and intimacy but also a merging of assets, a sharing of financial burden and responsibility, and the combining of formerly discrete properties?

Romantics may find this hard to swallow. The cons of the cohabitation agreement boil down to your weight on that romantic, often-nearsighted love against the practicality of forethought and a healthy dose of realism. At the end of the day, it’s really only as unromantic as discussing your budget or choosing the best joint account.

On the plus side, a cohabitation agreement—to a much further extent than a prenup—doesn’t have to all be about the doom and gloom of the potentiality of a failed relationship. Many times this agreement can amount to a well-thought-out plan for the course of your life together, things like how and when bills will be paid and by whom.

This can leave you with more time, later on, to focus on enjoying each other’s company rather than discussing the often dour realities of, well, life.

Additionally, one of the possible provisions of cohabitation agreements is to make space for the possibility of a changed relationship status, whether that means a marriage or parenthood.

Instead of thinking of the document as a piece of cynicism, you could think of it as a way to possibly create a happier habitation going forward without having to worry about the gray areas of any different disagreements that might come up.

How Do I Get A Cohabitation Agreement?

So you’ve decided to sign the cohabitation agreement. But what exactly is it that you’re signing? Where does this mysterious document come from and how can you and your partner(s) get your hands on it?

You can either consult a lawyer to moderate discussions and draft your document or you can go about it the DIY way. The Internet provides a number of useful templates that you can fill in to make a legally-binding document that covers the specific protections and clauses for your particular relationship and the finances and properties therein. Talk to a legal professional to learn the specifics of your state and situation.

Typical cohabitation agreements can include a variety of clauses. Partners can discuss what and what amount of shared expenses (including mortgages, leases, automobiles, child payments, bills, etc…) are to be held responsible by a single party or by both.

It’s always good to think about these things and have a discussion beforehand. Everyone’s situation is different, so do what is best for you and your partner. These may not apply to everyone but some possible clauses might be:

•   Who submits the rent check every month?
•   How much of every partner’s income goes into the joint checking account?
•   Who would keep Larry, the cat?
•   Will your partner(s) be a beneficiary for your inheritance in the case of your untimely death? (No, Larry can’t inherit your life savings)
•   Who would keep the hand-knitted rug you picked out together on your backpacking trip to Peru (even though, maybe, one of you carried it on our back for a few hours longer through the Andes)?
•   Who pays the water and who pays the electric?
•   Who would get the airline miles on the joint account?
•   Who pays the credit card bill that’s been piling up?
•   Who would keep the 1987 Datsun that still kind of runs so long as you don’t go on the freeway?
•   Who would be responsible for putting money into the retirement account or the second honeymoon fund?
•   Can you make healthcare decisions for your partner in the case of their incapacitation?

The possibilities are endless and the document is something you can craft to be the perfect fit for your relationship. Your relationship isn’t like any other, and your cohabitation agreement won’t be either.

Signing on the Dotted Line

Once you’re ready to sign the document you’ve crafted, you’ll need a witness—likely a notary or a lawyer, to validate that each partner signed the agreement themselves and not while under duress (which would nullify the agreement). Larry the cat, unfortunately, does not count as a valid witness.

Once everyone agrees the document is signed and you can go back to holding hands instead of holding pens.

Congratulations! You’re now officially cohabitating. A great way to get this house party started: a SoFi Money® cash management account.

With SoFi Money you can save, spend, and earn all in one place. Plus, SoFi Money offers joint accounts so you and your partner have equal access and control over the account. SoFi Money could be a great way to pay your housing expenses together.

Learn more about SoFi Money’s joint accounts.


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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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