Key Things To Understand About Cohabitation Agreements in Minnesota
Statistics show that people are getting married later in life than ever before. In fact, according to the CDC, marriage rates have been declining on average. Some people are choosing to date longer, while others choose not to get married at all.
In lieu of marriage, many couples are living together while unmarried. Over time, these cohabitating couples accumulate assets, possibly have children and build intertwined lives.
When a marriage ends, Minnesota divorce laws affect how the assets are divided. However, Minnesota courts don’t recognize financial or property claims between unmarried couples. If you and your partner are unmarried and break up, there’s no guarantee that your assets will be divided fairly—no matter how long you’ve been together.
Unmarried couples must explore other ways to protect their interests, just in case. In this article, we’ll discuss the most widely recognized way: a cohabitation agreement. We’ll talk about what a cohabitation agreement is and how it can help you.
Minnesota Does Not Recognize “Common Law Marriage”
First, however, you may be asking yourself why common law marriage laws don’t apply here. If a couple lives together for years and years, isn’t that a common law marriage?
Not here. Minnesota doesn’t recognize common law marriage. While it’s widely known and discussed in popular culture, common law marriage is only recognized in seven states (Colorado, Iowa, Kansas, Montana, New Hampshire, South Carolina, Texas and Utah). If you live in Minnesota, common law marriage does not exist.
Cohabitation Agreements Are Contracts That Define Your Rights
Cohabitation agreements are legally binding contracts between two people who live together but are not legally married. The contract defines the rights and responsibilities of the couple in the event of separation or death. It can include things such as:
- Financial expectations, including how assets, debts and expenses will be handled
- Property ownership, including property acquired during the relationship (covering houses, cars, pets and more)
- Financial support or insurance coverage
- Estate planning and inheritance rights, coordinated with any wills and trusts
- Power of attorney and health care directives in the event of incapacitation
- Tax considerations
- Ways the agreement can be amended or terminated (for example, if the couple gets married, does it convert into a prenuptial agreement, or does it terminate?)
These agreements must meet certain legal requirements to be enforceable in Minnesota. They must be in writing and signed, clearly outline financial responsibilities and property rights and include full financial disclosures.
The best way to help ensure that your cohabitation agreement is done correctly and will be enforceable is to work with an experienced attorney. The attorney can guide you through the process and answer your questions.
Do I Need a Cohabitation Agreement?
A cohabitation agreement can be helpful for many types of unmarried couples. You may want to think about this type of agreement if:
- You have a child or children from a previous relationship and want to protect their inheritance.
- You entered the partnership with a business or property, and you want to define whether or not your partner has ownership.
- You are living in a house your partner owns, but you have contributed to it financially or through sweat equity.
- You want your partner to be entitled to your assets if you pass away or become incapacitated.
In addition to the scenarios above, there are numerous instances where an agreement like this can come into play.
Your Cohabitation Agreement Is an Opportunity To Talk About Your Expectations
We hope you never need your cohabitation agreement, but we want it to be there just in case. Importantly, the process of drafting the agreement can be a relationship-strengthening exercise. It’s an opportunity to talk about your expectations and questions so you start your time living together on the same page.
If you don’t have this agreement, any debts or assets in your name stay with you. Conversely, any debts or assets in your partner’s name stay with them. This happens regardless of any contributions or benefits you each make or receive. That may work for some couples, but does it work for you?
Your Cohabitation Agreement Is Helpful in Many Ways
Cohabitation agreements are useful documents that take comparatively little effort to put together. They can save you from extensive financial loss, protracted legal battles and the heartache that often accompanies them.
Here are some ways it can benefit you:
- It’s a flexible document – Minnesota divorce laws apply to all couples the same way. Cohabitation agreements are much more flexible. You can customize them to your situation to address what matters most to you.
- You can update it as things change – Maybe you decide to upgrade to a condo or a second house together. You might buy a car, adopt a dog or start a business. You can update your cohabitation agreement as your life changes.
- It protects you from drawn-out legal battles – Without a cohabitation agreement, you could spend years in court trying to resolve extended disputes.
- It protects your partner and your family – A cohabitation agreement can work in tandem with your estate planning to name your beneficiaries and establish ownership levels of assets. If you pass away, the agreement can provide clarity on who owns what.
With an agreement, possessions, assets, bills and debts should all be clearly allocated, removing any confusion during a breakup. Ideally, this will allow everyone to move on peacefully.
If a dispute does arise, an agreement offers legal avenues to resolve it. Let’s say your ex is refusing to give you your fair share of the assets. If you have an agreement to prove ownership, you’ll be able to bring a case in civil court.
Think About Your Cohabitation Agreement Early
If you end up in court, the agreements will protect your interests. However, your cohabitation agreement must exist in order to do that! And we know it’s challenging to create one when things are already going wrong in a relationship.
The best way to approach this is to create an agreement while things are going right. If possible, finalize the agreement before you move in together. That gives you and your partner an incentive and a deadline to get the agreement done.
If you already live together, now is the next best time! Put extra thought into the agreement any time your circumstances change: when you’re moving, having kids, starting a business, or purchasing assets.
Talk With a Lawyer About a Cohabitation Agreement
If you think a cohabitation agreement is right for you and your partner, talk with a lawyer about your options. Your attorney can answer your questions and guide you through the process the same way they would a prenuptial agreement.
Get started by contacting our team at White & Associates in Elk River, Minnesota to chat about your concerns. You can schedule a confidential consultation by calling 763-241-0477 or contacting us online.
