Today, many couples choose to live together, but do not wish to get married. Some do it for legal reasons, where they are still married and do not want a divorce, and some choose not to marry simply because they do not believe in the institution of marriage.
Most married couples do not realize that, by marrying, they entered into a legal contract. The contract defines the rights and obligations they owe to one another as a married couple. Unsurprisingly, unmarried couples can also enter into contracts to establish rights and obligations. While these contracts can be referred to by many names, they are most commonly called nonmarital agreements or cohabitation contracts.
In 1976, the California Supreme Court issued a decision establishing nonmarital agreements. The decision allowed unmarried couples to enter into written and oral contracts covering rights often associated with marriage, such as property rights. In addition, an unmarried couple may create a nonmarital agreement through their actions, without ever writing anything down or specifically speaking about it.
Nonmarital agreements are not right for every unmarried couple; generally, they are appropriate when the couple expects to stay together for a long period of time and a significant amount of money, property, and debt will be accumulated. Even those couples opposed to the institution of marriage should strongly consider a nonmarital agreement to protect their interests, and to ensure that if the relationship ends the property distribution is orderly. Older couples may wish to use a nonmarital agreement to ensure that their property is distributed the way they wish.
Just as every relationship is different, so is every nonmarital agreement. The nonmarital agreement should be tailored to your relationship, and include the level of detail you want. Most nonmarital agreements should contain items discussing:
Acquired property – How should ownership of items acquired during the relationship be determined? Should it be 50% or should the property belong solely to the person who bought it?
Previously owned property – Many couples prefer to solely own the property they owned when they entered into the relationship, but memorializing it can help cut down on confusion.
Expenses – It may be helpful to include information regarding which partner will pay for expenses. You have several options, including an even split, a proportional split based on income, or pooling money in a joint account.
Separation or death – It is important to include information on how property should be distributed if the relationship ends or one partner passes.
While the California courts have upheld nonmarital agreements, they may refuse to enforce an agreement in some circumstances. If the nonmarital agreement appears to include consideration for sexual services it may not be enforceable. For example, if one partner agrees to share his or her income in return for the other partner’s love and companionship, a court may decline to enforce the contract for requiring sexual activity. In addition, some courts may not enforce an oral agreement, because it can be difficult to determine the terms of the agreement without written evidence.