The Importance of a Cohabitation Agreement

While the divorce rate has seen a decline since 2000, it remains significant with Forbes citing a  43% divorce rate  in 2025. Alarmingly, this rate jumps to 73% for second and third marriages, with the average marriage lasting around 8 years. Hence, many couples opt for cohabitation instead of marriage.

However, cohabitation is not immune to breakdowns, and when it happens, figuring out who is entitled to what can become complex. This is where a cohabitation agreement becomes invaluable, ensuring clarity even if the relationship is purely practical rather than romantic.  if you have ever watched the TV Show the Big Bang Theory, you may recall Sheldon Cooper's lengthy and detailed roommate agreement with Leonard.  That is a form of cohabitation agreement, though neurotic provisions are just an option and not a requirement. 

A cohabitation agreement can offer peace of mind by detailing each party’s rights and responsibilities. The agreement requires open discussions about finances, existing assets, debts  and expectations.

You can tailor a cohabitation agreement to suit your and your partner’s unique needs, covering aspects like:

• Financial Support: It can specify arrangements for financial support, also known as palimony, especially if only one party is working based on the relationship's dynamic.
• Acquisition of Assets: Clearly outline how joint assets, including real estate, are acquired and divided if the relationship ends.
• Payment of Expenses: Decide on how bills will be managed during and potentially after the relationship.
• Joint Accounts: Address the sharing and management of joint bank accounts or investments.

If you and your partner struggle to reach an agreement, consider investing in a mediator to help negotiate terms. Settling these matters in advance can substantially reduce stress and financial strain should the relationship end.