Top Benefits of a Cohabitation Agreement for Couples

Moving in with your partner is exciting. You’re ready to share your life, split the bills, and maybe even buy property together. But here’s something most couples don’t think about: what happens to your assets if things don’t work out?

In Australia, 18% of couples are now living together without being married – that’s triple the rate from 1986. With more Australians choosing to live together before (or instead of) getting married, a cohabitation agreement (also called a Binding Financial Agreement) has become one of the smartest decisions a couple can make.

Unlike married couples, de facto couples don’t automatically have the same legal protections. A cohabitation agreement changes that by setting clear terms about property, finances, and responsibilities – both during the relationship and if it ends.

Key Benefits of a Cohabitation Agreement

• Financial clarity – Know exactly who owns what and how bills are split from day one
• Asset protection – Keep your home, inheritance, or business safe if you’ve brought more into the relationship
• Reduced legal costs – Avoid expensive court battles over property if you separate
• Children’s security – Protect assets for kids from previous relationships
• Peace of mind – Strengthen trust by planning ahead while things are good

1. Protect Your Assets When You Have More to Lose

One of the biggest benefits of a cohabitation agreement is protecting what you’ve worked hard to build. If you’re buying property together, or one of you already owns a home, the agreement makes ownership crystal clear.

Say you own a house worth $600,000 and your partner moves in. Without a written agreement, they might claim a share of your property if things end – even if they never contributed to the mortgage. A Binding Financial Agreement prevents that scenario by documenting who owns what.

This protection extends to:

• Savings and investments you had before the relationship
• Superannuation you’ve accumulated
• Family businesses or assets tied to relatives
• Future inheritances from parents or family members

2. Save Thousands in Legal Fees

Breaking up is hard enough without spending $20,000+ fighting over who gets what. A cohabitation agreement cuts through the uncertainty by spelling out the terms up front.

Without an agreement, de facto property settlement disputes often end up in court. You’ll both need lawyers, possibly barristers, and months of stressful negotiations. The legal bills add up fast – money that could be better spent moving on with your life.

The agreement acts like a financial roadmap. If you separate, you already know:

• How shared property will be divided
• Who keeps which assets
• Whether anyone receives financial support
• How joint debts will be handled

Most separations with a solid agreement in place are resolved in weeks, not years.

3. Secure Your Children’s Future

If you have kids from a previous relationship, a cohabitation agreement helps protect their inheritance and financial security. You can specify which assets remain separate and ensure your children aren’t disadvantaged if your new relationship ends.

For example, you might agree that:

• Your family home (bought before the relationship) stays in your name for your children’s benefit
• Life insurance payouts go directly to your kids
• Certain investments are quarantined for their education or future needs

This is particularly important for blended families where both partners have children. The agreement creates boundaries that respect everyone’s financial obligations.

4. Provide Healthcare and Estate Planning Security

Here’s something most people miss: without a legal marriage, your partner has no automatic right to make medical decisions if you’re incapacitated. They’re not considered your next of kin under Australian law.

A cohabitation agreement, combined with proper medical directives and estate planning documents, can address:

• Who makes healthcare decisions if you can’t
• How you want end-of-life care handled
• Estate distribution that includes your partner (wills still required)
• Access to your medical information

While the agreement itself doesn’t replace a will or a power of attorney, it encourages couples to consider these issues and make appropriate legal arrangements.

5. Strengthen Your Relationship Through Open Communication

Many couples worry that discussing a cohabitation agreement signals a lack of trust. The opposite is true. Having honest conversations about money, property, and expectations actually builds trust.

You’ll both know:

• How household expenses will be shared
• Who’s responsible for which bills
• How major purchases will be funded
• What happens if one person can’t work

Rather than leaving these questions to chance or assumption, you’re addressing them together. This reduces conflict and prevents resentment from building over unspoken expectations.

Think of it like planning a long road trip together. You wouldn’t just jump in the car without discussing the route, costs, and what happens if something goes wrong. Your shared life deserves the same thoughtful approach.

What a Cohabitation Agreement Can Cover

A well-drafted Binding Financial Agreement typically includes:

• Property and assets: What each person owns now, how joint purchases will be handled, and the division terms if you separate.
• Financial contributions: Who pays for what during the relationship, from rent and groceries to holidays and renovations.
• Debts and liabilities: Existing debts stay with the person who incurred them, and terms for managing any new joint debts.
• Spousal maintenance: Whether either person will provide financial support after separation, and for how long.
• Superannuation: How retirement savings are treated, especially if one partner takes time off work to care for children.

The agreement should be reviewed every few years, particularly after major life changes like having children, buying property, or receiving an inheritance.

How to Make It Legally Binding

For your agreement to hold up under the Family Law Act 1975, you both need independent legal advice. That means separate lawyers – one for each of you. Your lawyer will explain the terms, assess whether the agreement is fair, and provide a signed certificate confirming they’ve advised you.

Without these certificates, the agreement isn’t valid. Courts can also set aside agreements if they’re unconscionable, if one person was pressured into signing, or if significant financial information was hidden.

The cost varies depending on complexity, but expect to pay between $2,000 and $5,000 per person for legal advice and drafting. That’s a fraction of what you’d spend on a contested separation.

Who Benefits Most from a Cohabitation Agreement?

While any de facto couple can benefit, these agreements are particularly valuable if:

• One partner has significantly more assets or income
• Either of you owns property or runs a business
• You have children from previous relationships
• You’re expecting an inheritance or tied to family wealth
• Either of you has been through a difficult separation before
• You’re buying property or making major investments together

Even couples with similar assets often choose to create an agreement simply for clarity and peace of mind. The median age of people in a de facto relationship in Australia is 35 years – an age where many have accumulated assets worth protecting.

If you’re considering moving in together or you’ve been living together for a while without legal protections, now is the time to act. A cohabitation agreement isn’t about planning for failure – it’s about respecting what you’ve both built and protecting your shared future.

Our experiencedde facto lawyers can help you draft a Binding Financial Agreement tailored to your situation. We’ll make sure both partners understand the terms and that the agreement meets all legal requirements. Book a consultation to discuss your options and get the protection you deserve.