Cohabitation: Economic Benefits and Drawbacks

Wheaton Attorneys for Cohabitation Agreements

According to a recent study that the Pew Research Center conducted, about 60 million people in the U.S. ages 30 to 44, about seven percent of the total population, lived with a partner outside of marriage. This is an increase of almost 50 percent since 1995.

People who cohabitate cite a variety of reasons for their choice: they want to be sure that their partner is "the one" before they marry, they believe they are less likely to divorce because they know what daily life will be like together prior to marriage, or they believe cohabitation will save them money by combining incomes and expenses.

Economics of Cohabitation

Most cohabitating couples believe that living together will benefit them financially. The Pew study showed that this was true - for certain groups.

The Pew data demonstrated that two college graduates who cohabitate have an average annual income of $106,400, while married couples with equal education have an average annual income about $5,000 less. Those living together are also able to split the costs of a household.

Drawbacks to Cohabitation

When considering a serious step like cohabitating with a partner, it is important to consider not only the reasons in favor of the move, but also some potential drawbacks and how a person can protect him or herself if the relationship should end.

Those without college degrees are more likely to cohabitate, according to the study, and cohabitation does not save them nearly as much money as it does for college graduates. Cohabiting individuals with only a high school education have an average annual income of $46,540; and were each responsible for almost the same percentage of household income whether or not they lived with a significant other. The research suggests that those without college degrees are more likely to still live with family members if they are not living with a significant other, so cohabitation does not result in as much savings in living expenses.

In addition to not saving money for many people, cohabitation opens a person up to serious financial consequences if a relationship ends without any of the protections of a legal marriage.

Unless both parties' names are on the title to property that the couple acquires during the relationship, there is no legal presumption that the property belongs to both parties. Even though cohabitating couples often pool their resources in the same manner as married couples, there is also no obligation for one party to provide any kind of financial support to the other if the relationship should end. The sole exception would be that if the parties have children together, the custodial parent is entitled to child support for the benefit of the children. Additionally, there is no responsibility to share debt if, for instance, one person's credit card was used for joint purchases.

Plans for Cohabitation

Couples who choose to cohabitate can take steps to protect themselves in the event they decide to part ways. Those planning to cohabitate should consult an experienced attorney at Andrew Cores Family Law Group and draw up a cohabitation agreement, similar to a prenuptial agreement, which details the financial arrangements and property division should the couple decide to split.

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