Divorce, Marriage, and Cohabitation Agreements: New Considerations for Millennials

More Americans in their 20s live with a partner than are married to one. While attitudes about marriage have changed, millennials have much more open attitudes towards cohabitation than previous generations. A cohabitation agreement can protect them if their relationship ends, but most Millennials have never considered getting one – assuming they have ever even heard of cohabitation agreements.

Millennials are accused of “killing” a whole lot of industries lately: Golf, cable television, casual dining chains, credit cards, even American cheese.  But perhaps the oddest institution they are accused of killing of late is (wait for it): Divorce.

Wait, what?  Why would lowering divorce rates be a bad thing? Well, if you look at the numbers more closely, what is happening is millennials are waiting longer to get married. They are waiting for their careers and finances to stabilize, and to complete their educations, before saying “I Do.”

One study that caused a stir in late 2018 came from University of Maryland sociology professor Philip Cohen, whose analysis of U.S. Census data showed that the divorce rate in America plummeted 18 percent from 2008 to 2016.  This is largely due to millennials.

As a result, Cohen said that the married population is getting older and more highly educated, which means that marriage is becoming more exclusive and sought after as more of a status symbol.  Millennials appear to be changing traditional attitudes around marriage. For instance, while millennials are holding off on marriage, they are not holding off on living together.

These emerging trends mean that millennials should approach issues of marriage, divorce, and cohabitation differently than previous generations.  By way of contrast, baby boomers usually married young and have historically had unusually high divorce rates.  Even today, boomers are getting divorced at high rates into their 60s and 70s, a phenomenon known as “Grey Divorce.”

Our firm certainly deals with many of these grey divorces, which tend to require a core competency in how to deal with significant assets (such as businesses built during the marriage), inheritances received during the marriage, trusts established for one of the spouses, and retirement assets that are divided via qualified domestic relations order. But we’re also seeing a need to educate and protect Millenials who are choosing cohabitation over marriage – for now, at least. Enter the cohabitation agreement.

Millennials and Cohabitation

Because of changing Millennial attitudes towards marriage and cohabitation, those who choose to live with their romantic partner should seriously consider entering into a non-marital cohabitation agreement.  This is a legal contract, similar in some ways to a prenuptial agreement, that specifies how a non-married couple will divide any shared property (assets or debts) if the relationship ends.

This is especially important in an era where the number of millennials cohabitating has almost doubled, with two-thirds of couples now living together before marriage, and those cohabitation arrangements can be lengthier than some marriages!

Why Are Non-Marital Cohabitation Agreements Helpful?

Cohabitating couples are not offered the same protections under the law for the division of their property that married couples are.  Millennials often enter into relationships bringing with them with a variety of assets and debt that may include student loans, savings, gifts from parents, cars, condos, pets, and retirement plan assets.

Then, while cohabitating, couples begin to make budgets together, commingle their finances, and make joint investing decisions.  You might move into your boyfriend’s house, or buy a dog together, or co-sign a lease together, and that can get tricky if the relationship comes to an end.

The non-marital cohabitation agreement specifies that you and your partner are choosing not to be married, and so you will not be subject to the default “domestic relations” laws on common law marriages (including the establishment of alimony).

However, you may still want to be able to deal with the emotional turmoil of a breakup without the added stress of an eviction proceeding, or a repossession of a co-signed car destroying your credit, or losing your cat on top of losing your girlfriend. With this sort of contract, you can be in better control of how jointly acquired, or separate, property is to be divided and how the extrication of your finances should be handled.  This makes things much easier should you decide to split.

Everyone knows litigation is expensive, and having a cohabitation agreement in place can save a huge amount of time, money, and heartache.

Prenuptial and Marital Agreements vs. Cohabitation Agreements

Unlike these cohabitation agreements, prenuptial agreements (also known as “prenups”) and marital agreements (which are essentially prenups reached after the nuptials have been exchanged) are for couples who plan to be (or are) married. Cohabitation agreements, on the other hand, are distinctly non-marital. They help clear the air so that everyone is on the same page that the couple is choosing not to be married, thus avoiding tricky common law marriage arguments down the road.

The cohabitation agreement does not morph into a prenup if the couple decides to marry, but rather typically will include in its language the agreement that if the couple marries the cohabitation agreement is null and void. Couples who plan to marry should consult a family lawyer before drawing up a prenup, as the state-by-state requirements can be very rigorous.

The prenup defines terms surrounding the division of assets and debts (defining which are separate and which would be marital).  It may also address alimony and/or attorney fees, although those provisions are in many states revisited in a divorce. The prenup will typically revoke and override any preexisting cohabitation agreement.  The prenup generally acts as a roadmap for the division of property should the marriage end in divorce.

A valid prenup is recognized in every state, while a cohabitation agreement, though more flexible than a prenup, is not necessarily recognized in every jurisdiction. Check with a local attorney if you are interested in protecting your assets with your live-in partner.

Prenups and Millennials

Prenuptial agreements for millennials become even more important when one considers the data showing that millennials are getting married when they are older, more educated and more advanced in their careers than newlyweds of previous generations. This means that they usually bring more assets into a marriage – and that those assets are therefore more at risk.

Millennials also seem to have different interests and priorities from older generations, and these factors should be considered when drawing up a prenuptial agreement. An example of this is soaring pet ownership amongst millennials. With younger Americans increasingly delaying marriage and parenthood, pets are often taking the role previously occupied by children. And the issue of who gets the dog in a divorce is just one more reason to consider a non-marital cohabitation agreement or if getting married, a prenup.

A version of this article was previously published on www.bamfamlaw.com