What is a Cohabitation Agreement?
A cohabitation agreement serves the same purpose as a prenuptial agreement, except between dating couples, either of whom can be legally married or unmarried. Typically the purpose of a cohabitation agreement is to protect the separate premarital assets, property, and income of both individuals. It is a common misconception that a cohabitation agreement created in Minnesota must take place before two people move in together . Although this may be a good idea, it is not necessary, and many courts have enforced cohabitation agreements created after two or more individuals moved in together. It may, however, become more difficult to show the intent of the parties if a cohabitation agreement is not created until the couple is residing together. An experienced attorney can best advise you regarding the proper timing for a cohabitation agreement.
What are the legal requirements in MN?
The requirements for a valid cohabitation agreement in Minnesota are generally the same as those for drafting a valid prenuptial agreement. In fact, an attorney can often times create a prenuptial agreement that is then used as a cohabitation agreement that is later adopted as a prenuptial agreement when one or both of the parties later marry. The requirements for a valid prenuptial agreement in Minnesota were discussed in more detail in a previous blog post and include:
The legal requirements for a valid cohabitation agreement specific to cohabitating couples are where these agreements vary from prenuptial agreements in Minnesota. Specifically, the requirement that the agreement be signed voluntarily is key. This means the agreement must be signed without any coercion by either party. The agreement must be signed before the signing party begins to make a financial contribution to any of the specifically identified property. The agreement may be terminated by a subsequent written agreement at any time. A prior agreement can be changed by mutual agreement. In Wright v. Wright the Minnesota Court of Appeals held that a cohabitation agreement cannot modify custodial rights to children. Such agreements regulate and govern the parties’ rights and liabilities and the parties’ property but nothing in a cohabitation agreement can impair the right of either party to seek a court approved child support order.
Benefits of a Cohabitation Agreement
For parties who live together out of wedlock, a cohabitation agreement can be beneficial in many ways. Initially, it will provide you with financial protection. A cohabitation agreement can set forth how property is to be divided if the relationship does not work out. The parties may create a schedule for division of household bills or set up a joint account to help avoid disputes in the future. Financial protection is an important benefit of a cohabitation agreement.
Also, a cohabitation agreement can help you define who is responsible for daily expenses and what your intentions are with regard to joint purchases. A cohabitation agreement can also help properly align your retirement plans and insurance policies so that each party’s financial future is protected.
The specifics of a cohabitation agreement are important and will depend on your particular needs. For example, if one party owns a house and the other move’s in, arrangements should be made in the event the moving party has to move out (due to a breakup or otherwise). If one party makes higher income than the other, provisions can be made for spousal support. Cohabitation agreements are also essential if the court needs to address child custody and parenting time.
In addition, your cohabitation agreement may address whether or not one or both parties has the right to make medical decisions for the other if he or she, for some reason, becomes incapacitated. Lastly, a cohabitation agreement can avoid the presumption of marriage by holding out to the world that you are not married. It does this by expressly denying the requirement of mutual consent to a common life, financial responsibility or support. Cohabitation agreements can be of tremendous benefit to parties who live together as they clearly spell out how financial and other issues will be resolved and assures each party will be protected in the event that your relationship ends, whether through a breakup or death.
Common Cohabitation Agreement Terms in Minnesota
Cohabitation agreements between opposite and same-sex couples in Minnesota often contain the following common agreements:
Property Division
Include details about separate property versus marital or joint property. Address the issue of how joint property will be distributed if the relationship ends and who retains separate property. Specify how property acquired during the relationship will be treated in the event of a separation or termination of the relationship.
Financial Support
Include terms for spousal support or financial maintenance, if contemplated by the parties. Define the duration and amount of support. State how the recipient will be supported if the relationship ends.
Dispute Resolution
Address how disputes will be resolved if there is a disagreement between the parties. Specify mediation, arbitration, or another form of alternative dispute resolution as the preferred method to resolve disputes between the parties.
It is important that the parties to the cohabitation agreement understand the types of issues they can address in a cohabitation agreement. If you are considering a cohabitation agreement, contact a Minnesota Family Law Attorney experienced in drafting cohabitation agreements.
Creating a Cohabitation Agreement
The process for drafting a cohabitation agreement in Minnesota is fairly straightforward. In general, the first step is for the couple to schedule an appointment with a lawyer who has experience drafting this type of document. Ideally, there will be one lawyer-or one law firm-for each party to avoid the potential for a conflict of interest. Once the couples’ individual attorneys have been selected, the next step is to schedule a meeting (or series of meetings) to discuss the creation of a legally binding cohabitation agreement. Once the necessary information has been gathered, the attorney will draft the agreement in its entirety, including any proposed amendments that will allow for changes to be made in the future , if necessary. The couple will then have the opportunity to review the completed agreement and communicate any changes that they would like to make. They may send the proposed modifications to their respective attorneys, or meet with the attorneys to create the amended version. Once an agreement has been reached about the finalized document, the cohabitation agreement will be signed by both parties to prove that it is binding. It is worth noting that drafting a cohabitation agreement without the help of an experienced lawyer can be risky. Even seemingly minor administrative errors or typos can render the document invalid, which means that the intended legal protections are not in place.
Cohabitation Agreements and Marriage Agreements
Cohabitation agreements, unlike marriage contracts, are legal agreements between individuals who plan to cohabit, but who are unmarried. A marriage contract is a contract made prior to the marriage of the individuals. The marriage contract will become effective when the marriage occurs and often only becomes effective upon marriage. In other words, should the marriage not happen, then the marriage contract never comes into effect. In many ways, it is a sort of a pre-nuptial agreement.
In contrast, the cohabitation agreement becomes effective immediately and runs its course whether or not the individuals marry. Because of the cohabitation agreement’s ability to be entered into immediately, and without requiring the lengthy pre-marital negotiations that a marriage contract would require, it is becoming increasingly more popular for unwed individuals.
A cohabitation agreement can be formally recognized by the court by filing it with the court. However, in Minnesota (unlike some other states) a cohabitation agreement will only be enforced if it is in writing. Minn. Stat. ยง 519.11.
Section 519.11 prohibits agreements made by unmarried cohabitants that are only aimed at regulating sexual relations. However, Section 519.11 does not bar enforcement of any provision contained within the cohabitation agreement that governs money. Money provisions do not violate Section 519.11 simply because they are incidental to what could otherwise be a void provision under the statute. A provision within a cohabitation agreement is prohibited if the parties’ predominant purpose in entering into the agreement is to regulate sexual relations.
Proving a Cohabitation Agreement in Court
The enforcement of a cohabitation agreement can be sought within the courts in Minnesota, provided that you can show the agreement is valid. For a cohabitation agreement to be valid, it must not be an unreasonable restraint on trade or a violation of public policy. In addition, each person named in the agreement must have reasonable time to review it, and both parties must have independent legal representation when entering the contract. While cohabitation agreements are generally enforced if there is a dispute, there are times in which the court may refuse to enforce a contract. Twelve situations exist in which a court may deny the enforcement of a contract, including: Marital assets are subject to equitable division under MN 518.58 . If it is determined that a cohabitation agreement interferes with the equitable division of property, the agreement may not be enforced. For example, if a couple resides together before they get married, one person bought a house with their assets, the agreement stipulates that title to the property is the sole property of the person who initially bought it, and later there’s a divorce, there will likely be a dispute over who gets to keep it. The agreement violates public policy. Even though contract law generally allows you to include any terms you like, courts can rule against the enforcement of a contract if the contract in some way is against public policy. The agreement is criminal. Any contract that has the purpose of committing a crime is unenforceable, and that would include pre-nuptial agreements.