What is a Cohabitation Agreement?
A cohabitation agreement is a legally binding document written by unmarried couples who have chosen to live together at the same residence without the benefit of marriage. Unmarried living situations may include the couple owning property together, and agreements will often cover how any such property will be divided should the relationship end. While these agreements are not a replacement for a prenuptial agreement, they do cover more ground than traditional prenups, providing a footing for living situations that do not intend to lead to marriage. The cohabitation agreement is essentially meant to protect the interests of both individuals who make up the unmarried couple. Like traditional prenups, a cohabitation agreement clearly defines the obligations and rights of all parties and addresses the following issues , among others: The issues addressed in your cohabitation agreement will depend on the property you and your partner share and choose to address. Your attorney will help you work through the finer points of these issues, giving you a clear understanding of what the document means for both you and the other party. Cohabitation agreements can save both men and women headaches and worries by protecting their financial future if not their immediate assets. When unmarried couples decide to go their separate ways, settling their finances can prove bothersome, expensive and time-consuming — especially as they also deal with the emotional fallout. Advanced planning can prevent many conflicts over money, time or emotional energy, freeing both people for the next phase in their lives.
Illinois Legal Requirements
Cohabitation agreements in Illinois are governed by the Illinois Cohabitation Act (the "Act"), codified at 750 ILCS 65/5. Unlike prenuptial agreements which, if not executed in conformity with the Act, may be rendered void by a court if set aside on those grounds, live-in arrangements are not required to comply with the formalities of a marriage. That is not to say that a cohabitation agreement may be drafted without the careful consideration of legal counsel, however, as there are statutory provisions which, similar to the State’s Maternal and Child Health programs, may bring about an obligation to support the children of a cohabitating couple.
Although the Act provides that "[t]his Act is not intended to affect the common law in this state regarding enforcement of contracts." 750 ILCS 65/5(c), the Act also permits a "contract relating to cohabitation, including a contract to make a will or trust…to the same enforceable extent as any other contract entered into, or willed, or trust declared by persons competent to enter into or make the same contract if the contract is in writing and signed…by the parties." 750 ILCS 65/5(b) (emphasis added). Therefore, in recognition of the competing policies underlying the Act, Illinois courts are permitted, at their discretion, to enforce a cohabitation agreement that is both signed by the parties and in writing, as they see fit, within reasonable bounds.
Section (b) of the Act further provides guidance as to the requirements of a cohabitation agreement. The provision provides that the agreement may be made for any term, is enforceable without consideration, and is revocable, except to the extent that it provides for the disposition of property upon death. 750 ILCS 65/5(b). The provision also provides that, if a cohabitation agreement is not enforceable because it fails to substantially conform to the requirements of the Act, it is nonetheless enforceable to the extent necessary to avoid manifest injustice. Id. Section (c) of the Act provides clear notice that no obligation imposed upon a cohabitating couple relieves parents from obligations of support imposed upon them by law. 750 ILCS 65/5(c).
Cohabitation Agreement Essentials
A comprehensive cohabitation agreement contains several key components. While their complexity can vary, there are basic elements that every enforceable contract should include: The agreement should lay out the financial arrangements of both parties. It will typically cover how either party’s income and expenses will be divided, what sort of expectations they have in terms of support, what they will do in the event of a purchase of real estate, how to deal with joint credit card debts, and if any type of minor is born, how those expenses will be covered. If one party owns a home, does the other party pay rent? If a couple gets a joint checking account, what rights do both parties have to funds held within? If a jointly owned car is repossessed, how will this be paid? Essentially, a good cohabitation agreement will set parameters on the income and expenses of a couple from how much is spent on groceries to how medical expenses will be divided if necessary. Property rights that both parties own and maintain in a relationship should be specified. In some cases, these rights include full rights and in others, specific rights. For example, a partner may own a car that is entirely under his or her name alone, but his or her partner uses it almost exclusively – the agreement may specify just that the car is owned by the one party and other may not use it. If the car were jointly owned, however, the agreement would have to set out an equal ownership right to both parties. The agreement should also lay out what happens to the property in the event of a break up, or in the event of death of one party. Any party hoping to establish a cohabitation agreement must sign it voluntarily, and with no coercion. Both people should read and have full understanding of the agreement and all expectations laid out within. In addition, some provisions within the agreement should be limited to separate provisions between the parties and could include such things as: a statement of obligations of each separate party, a mutual waiver of death benefits, a statement as to admissibility to court and mediation, and the signature line. All agreements should be typed and given space for both people to sign (and print) their names under.
How to Compose a Cohabitation Agreement
When it comes to drafting a cohabitation agreement, some cohabitating couples in Illinois may be able to use a simple template found online. However, in many cases, it may be extremely difficult for the couple to provide for all contingencies. Given the complexity of most cohabitating couples’ lives—regardless of how long they have been involved, and how much property they have acquired together—it is often better to retain the services of an attorney who has experience in drafting cohabitation agreements.
Although utilizing a template may appear to be the best course of action, a template can actually create problems for the couple if specific needs are not addressed. Templates often address only real estate owned by unmarried couples but ignore their personal property. If it is not addressed in the agreement, the couple would be forced to litigate over ownership of the personal property, leading to tremendous legal fees as well as emotional tension and turmoil. If the need for litigation arises, there will be a significant additional delay in the process, leading to even greater costs.
Also, some cohabitation agreements do touch upon spousal support; however , many templates are structured to operate in a manner similar to spousal support in marriages and offer no means by which to modify the agreement thereafter. For example, if one partner was unemployed when the agreement was drafted, they would receive "spousal" support. If their income then rose considerably, the original agreement may not allow for modification, leading to a windfall for that partner essentially out of pity. Many unmarried couples are not looking for spousal support of any kind.
Finally, there are a number of other factors that both partners want to consider and address in a cohabitation agreement, from debts to child support, to your favorite baseball team. It is easy for couples to overlook something that could lead to serious consequences later. Even if you are in general agreement about issues that you want included, an experienced attorney can help draft the cohabitation agreement and make sure everything you need is covered so that you can avoid pitfalls later down the road.
Therefore, it is important to contact an experienced Chicago family law attorney who can assist you in drafting a strong cohabitation agreement.
Cohabitation Agreement Advantages
A cohabitation agreement is more than just a tool for financial protection. It can also help serve you and your partner by clarifying your respective expectations of each other. This can include how household chores are split, how large purchases are granted approval, or what happens if one partner wants to relocate. Of course, a primary benefit of having a legally binding agreement in place is that the state laws regarding property division associated with unmarried couples will not decide how your assets are divided in the event your relationship with your partner ends. Because Illinois is not a community property state, these laws generally do not require assets gained during a relationship to be shared equally. However, this is subject to the discretion of the judge involved in the case.
Common Mistakes
Experienced family lawyers frequently see couples who decide to live together may not speak with their legal counsel about a cohabitation agreement. While the couple believes they do not need any kind of legal documentation for their relationship, nothing could be further from the truth. If there are no provisions put in place regarding how finances will work for the couple, or what will happen if the couple splits up, or what the custody arrangements will be if there is a child, things can get quite messy – especially if it is known at the outset that the two parties are going to break up at the end of a specific period of time (such as a graduate school program). If the couple does not have a cohabitation agreement, one of the parties could easily make a claim on the other with regard to how much money was spent or received, the custody of children, the division of assets, and so forth.
The most common mistakes with cohabitation agreements are based on the fact that the individuals have not been through the process of determining what their respective rights are in such an agreement. Here are some of the most common pitfalls, and how to avoid them.
The most common mistake that couples make is not having a cohabitation agreement at all. Many people believe that they can figure things out as they go along, or that nothing will happen. Let’s say a couple has children. If there is no cohabitation agreement in place specifying how child custody or child support will work in the event that the couple breaks up, then the parties could end up in court, spending a great deal more money than the cost of a cohabitation agreement, arguing about how the custody will work and whether more than the statutory amount of child support is appropriate .
Another pitfall is believing that any old form you download off the Internet will legally protect the parties if something happens with their relationship. While it is possible that a party can simply sign a piece of paper saying how his or her finances will be divided should the couple break up, Illinois law states that a cohabitation agreement must comply with the Illinois Marriage and Dissolution of Marriage Act in order to be enforceable, and most downloaded forms do not comply with that Act. In order to be sure that there is a valid cohabitation agreement in place, it is important that qualified counsel help the couple figure out what the agreement should be.
Many people will use a prenuptial agreement as a basis for a cohabitation agreement, but a prenuptial agreement is quite different from a cohabitation agreement. Because married individuals have a legal contract with each other, a prenuptial agreement can spell out the rights of the parties and provide protections that are not often found in a cohabitation agreement, especially with regard to children. So, while a couple might have a prenuptial agreement that says that they consider a cohabitation agreement, the fact is that the prenuptial agreement is just that: a prenuptial agreement. It only protects the parties to the marital contract, not those in a non-marital relationship. So, attempting to use a prenuptial agreement to protect the parties in a cohabitation agreement is not very helpful.