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Family and Succession law

Cohabitation agreements

A cohabitation agreement is wise to have when you start with an important new step in your life: setting up home together. The law has very few provisions addressing cohabitation. The rules that do exist, are entirely in connection with taxation. If you wish to establish and record that your relationship goes beyond a simple friendship, you should consider entering into a formal cohabitation agreement.

What is a cohabitation agreement and how does it work?

A cohabitation agreement is a form of legal paperwork between unmarried couples who live together. The most basic form of cohabitation agreement will set out the arrangements you have made with regard to financial matters, property, for example agreements about the mortgage, debts, and pension entitlements. There are many other aspects that can be addressed if you wish. Cohabiting partners are not subject to a community property regime; each retains his or her own assets and liabilities unless alternative agreements are made and formalized by means of a cohabitation agreement. You may, for example, decide that the household items and furniture are to be regarded as joint property.

Drawing up cost division and jointly owned property

In your cohabitation agreement, you might also consider making agreements with regard to the division of the costs of the household. Is each partner expected to pay an equal share, or are the costs to be split in proportion to income? In the latter eventuality, what qualifies as ‘income’? A cohabitation agreement allows you to make certain arrangements with regard to what happens to jointly owned property should one of the partners pass away. If no cohabitation agreement is in place, the deceased’s family automatically inherits one half of all joint possessions, including furniture and money, as determined by family law. This is often less than ideal; you may prefer everything to go to your partner. A cohabitation agreement with a survivorship clause will ensure that your wishes are respected.

What are the advantages of cohabitation agreements with regards to estate?

Alongside these ‘internal’ agreements, a notarial cohabitation agreement offers many other advantages, such as estate settlement. For example, when a cohabitation agreement is in place and one partner passes away, his or her estate is taxed at the same rate as that of a married person. Moreover, an exemption threshold of over €600,000 applies. Nevertheless, a cohabitation agreement does not automatically make you an heir to your partner’s estate, as would be the case for a married couple or registered partners (unless alternative arrangements are stipulated in a Will). If you wish your partner to inherit your estate, you must expressly name him or her as heir in your last Will.

Pension arrangements between unmarried couples

Pension funds demand to see a notarial cohabitation agreement if you wish to nominate your partner as the beneficiary of a partner’s pension, payable after your death. A cohabitation agreement drawn up by a notary firm such as Kooijman Autar in Rotterdam is often the only acceptable evidence of your partnership. Within the agreement, you can also stipulate whether you wish to share your retirement pension with your partner.

Is a cohabitation agreement the same as a registered partnership?

No, it is not! There is a common misconception that a cohabitation agreement is the same as a registered partnership. This is not the case. A registered partnership is formalized by the civil registrar and has almost the same implications as marriage. The cohabitation agreement, by contrast, is quite different from marriage. For example, a cohabitation agreement does not give rise to community property, whereas registered partners have the same community property rights as married couples. Only items which are purchased jointly by the cohabiting partners become their joint property, and only debts incurred by them jointly become their joint debts.

Are children drawn up in a cohabitation agreement?

If the partners have children, a cohabitation agreement offers a further advantage. Even if your Will stipulates that your estate, or most of it, is to pass to your partner on your death, in the absence of a cohabitation agreement, any children would be able to claim their statutory share immediately. With a cohabitation agreement in place, it is possible to stipulate in your Will that the statutory share of the estate to which the children are entitled will not be payable until after the death of the surviving partner. This ensures that the surviving partner can continue with his or her life without worries.

 

Schedule an appoint to draft your agreement

Please contact us if you need further information about the drafting of a cohabitation agreement. We shall be pleased to offer advice. You can call us on +31 (0)10 285 88 88 to schedule an appointment.


 


 

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