According to reports, many residents in Florida and other states are deciding to live together instead of marrying. And these arrangements have spawned an increase in so-called cohabitation agreements, basically a prenuptial agreement for the unmarried. Legally enforceable contracts, the agreements are becoming popular because people feel a need to protect their assets, children, and support obligations before or shortly after living with someone.
Some see the rise in these types of agreements as a natural extension to people putting off marriage or avoiding it altogether, in conjunction with the fact that as one gets older, they typically have the need for greater legal protection. A lot of cohabitation agreements are made out of necessity and are a reaction to both parties protecting themselves in case they decide to go their separate ways. Because couples that live together are experiencing an increase in legal disputes after they decide to split, they are recognizing a need to protect themselves.
Cohabitation agreements can spell out how large asset purchases, such as a house or car, will be divided in the case of a decision to part ways. Many have already seen the benefits of saving large sums of money and years of court battles. Similarly, cohabiting couples can shield one person from having to assume the other person's debt.
Determining if a cohabitation agreement is necessary is best considered at the onset of living with someone. The level of current assets and how extensive and how intertwined the finances are may also help gauge the need for a formal agreement with a partner. Residents of Florida living with someone to whom they are not married, or contemplating such an arrangement, might just discover that a cohabitation agreement can protect one's assets and one's future with or without one's significant other.
Source: CNN Money, "Prenups aren't just for married couples anymore," Jessica Dickler, March 20, 2012