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What are cohabitation agreements and do they compare to prenups?

It is rare to hear of cohabitation laws in the United States, especially ones that pertain to the division of assets for unmarried couples who live in the same home. Marriage numbers are at an all-time low, with the Pew Research Center indicating that 51% of adults are getting married. Many couples are choosing to avoid marriage, and when they also decide to live together, there are many combined assets that go into the relationship.

Cohabitating couples are increasingly seeking cohabitation agreements, a similar legal device to prenuptial agreements for married couples. A cohabitation agreement establishes guidelines for how issues related to unmarried relationships are handled, just like a prenuptial agreement would. Without one, it is very difficult - and often leads to an arduous legal battle - for unmarried couples who live together to determine child custody, support considerations and property division.

It is important to understand that prenuptial agreements and cohabitation agreements are not synonymous. There are default matrimonial laws that determine how assets, property and other issues are addressed should a married couple get divorced. Prenuptial agreements make a change to these default laws to suit a married couples specific wishes should they divorce.

Cohabitation agreements, on the other hand, establish original outlines for an unmarried couple should they break up. Since there are virtually no cohabitation laws, an unmarried couple has no legal support to fall back on should they split, leading to drawn-out cases of litigation to determine who gets what.

They are becoming very important contracts for unmarried, cohabitating couples, and considering the legal consequences of a break up, seek legal advice when entering a situation of cohabitation.

Source: CNN Money, "Prenups aren't just for married couples anymore," Jessica Dickler, Mar. 20, 2012

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