The Unromantic Contract Every Unmarried Couple Needs

Millions of couples in the U.S. live together without being married, often blending their financial lives without realizing the potential consequences. If you’re living with your partner, it’s essential to think about how you’ll handle shared assets and expenses. Putting a plan in place isn’t about expecting the worst; it’s about protecting you both if the relationship ends.

Taking the time to get your finances in order is a sign of a healthy partnership. The same detailed planning that goes into managing or a should be applied to your shared life. Before you even move in, it’s time to have an open conversation about money.

The Pre-Move-In Money Talk

Before you start packing boxes, it’s crucial to be honest about any skeletons in your financial closet. This means disclosing things like bad credit, a past bankruptcy, liens on property, or unpaid support. Since your finances will be connected to some degree, your partner deserves to know. After all, they’ll probably find out eventually.

Don’t wait until you’re settled in to discuss how you’ll manage money together. Talk about everything from spending habits to long-term financial goals and investments. You can always adjust your system later, but starting with a clear understanding prevents future conflict.

Why You Need a Cohabitation Agreement

Married couples automatically receive certain legal rights. If one spouse dies, the other typically inherits joint property and may be eligible for social security or retirement benefits. In a divorce, assets are divided by the court. Unmarried couples don't have these built-in protections, which makes financial planning even more critical.

It might not feel romantic, but a written agreement that outlines how property, assets, and shared expenses will be handled is one of the smartest moves you can make. This document—often called a nonmarital or cohabitation agreement—is a contract that gives you both legal control over your finances if you separate. It can save a massive amount of time, money, and stress by preventing disagreements about who gets what.

While sharing rent and utilities is a clear financial benefit of living together, there are risks. If you’re young and don’t have many assets, an agreement might seem unnecessary. But if you see the relationship as long-term, it’s a vital tool. When an unmarried couple splits up, you are legally entitled only to property that is in your name. You could get stuck with bills for joint purchases, find yourself unable to afford the rent on an apartment leased in your name, or be left responsible for a loan you cosigned.

What an Agreement Should Cover

A good cohabitation agreement is especially important if you’re buying a house, making other large joint purchases, or if one partner has significant debt. The agreement can:

Define how property you owned before and property you accumulate together will be divided if you separate.
Clarify how gifts and inheritances are treated.
Address whether one partner will provide support to the other after a breakup (sometimes called “palimony”).
Spell out who is responsible for the mortgage and who claims the tax deduction.
Designate who gets to stay in a rental apartment.
Outline how credit card debt will be handled.

It’s also wise to include a clause stating that you’ll use mediation to resolve any disputes before heading to court.

What If We Don't Have an Agreement?

Without a written contract, settling property disputes can get complicated. If you end up in court, a judge will first ask for a written agreement. If there isn’t one, they’ll try to determine if there was an oral agreement, which is tough to prove. Failing that, the court may look at your actions to see if an “implied contract” existed. For example, if you shared a bank account and split all expenses equally, a court might rule that an implied contract exists and enforce it, potentially resulting in one partner paying a settlement to the other.

A Quick Note on Common-Law Marriage

Some people believe they’re protected by common-law marriage, but it’s a widely misunderstood concept. Only a handful of states recognize it, and there are specific requirements you have to meet, such as presenting yourselves to the public as a married couple. The popular idea that you’re automatically married after living together for seven years is a myth; no state has such a rule. Relying on common-law marriage for legal protection is not a reliable strategy.

Practical Steps for Shared Finances

Even with an agreement, you need a plan for day-to-day money management. The principles of good , such as tracking income and expenses separately, can be incredibly helpful here.

When making large joint purchases, use a joint purchase agreement that specifies what happens to the item if you split. The person whose name is on the paper is the legal owner.

Buying a Home Together

If you buy a house, make sure both names are on the deed and specify how you hold the title:

If one person dies, the other automatically inherits the property. You can’t leave your share to someone else in your will.
Each person owns a specific share (e.g., 50/50 or 75/25). You can sell, give away, or will your share to whomever you choose.

Your cohabitation agreement should also detail what happens to the house if you break up, including how one partner might buy out the other.

Sharing Expenses

Decide on a fair way to split costs. You could divide everything 50/50, or the person who earns more could contribute a proportionally larger share to a household fund. As for banking, you can use a joint account or keep separate accounts. Be aware that with a joint account, either partner can legally withdraw all the money.

Navigating Taxes When You're Not Married

Unmarried couples cannot file joint tax returns. When you own a home together, you’ll need to decide who claims the mortgage interest and property tax deductions. It often makes more sense for the higher earner to take the full deduction to maximize tax savings, and then compensate the other partner. If you have a dependent child and provide more than half the cost of maintaining the home, you may be able to file as “head of household,” which can open the door to other valuable tax credits.

Don't Forget Wills and Health Directives

Finally, every adult needs a will, but it’s especially important for unmarried couples. If you die without a will, state law determines who gets your property, and your partner will likely receive nothing. The only way to leave property to your partner is through a will or by naming them as a beneficiary on accounts like life insurance or retirement plans.

It’s also critical to have advance directives, such as a living will and a durable power of attorney for health care. These legal documents ensure that your partner can make medical decisions on your behalf if you’re unable to, a right that isn't automatically granted to unmarried partners.