4 minute read

Cohabitation Agreement vs Power of Attorney - What Couples Need to Know

What's the difference between a cohabitation agreement and a Power of Attorney? And how does this choice impact your assets? Trust & Will explains.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

Moving in with your partner can be an exciting and romantic step in your relationship. But, while you may be caught up in the excitement of sharing a home, it's important to remember that cohabiting couples face unique legal and financial challenges. Unlike married couples, who have automatic legal protections and inheritance rights, unmarried couples must take specific legal steps to protect their assets and ensure their wishes are carried out in the event of incapacity or death.

That's where a cohabitation agreement and Power of Attorney comes in. These legal tools can help unmarried couples protect their assets and make sure their wishes are honored. But, what exactly are they, and how do they differ? In this article, we'll dive into the differences between a cohabitation agreement vs Power of Attorney, and help you decide which option is right for you and your partner. So, whether you're starting a new life together or have been living together for years, read on to learn everything you need to know about estate planning for unmarried couples.

What is a cohabitation agreement? 

A cohabitation agreement is a legal document created by two individuals who are in a relationship, living together, but not married. The document lays out pre-made agreements regarding how property should be divided if the couple were to ever break up, or if one of the partners were to pass away. It can also address other important matters such as financial support or child care. For more information, read our full guide on how cohabitation agreements work here.

What can a cohabitation agreement specify?

A cohabitation agreement can be fully customized to address any provisions deemed important or necessary by the couple. This means that there is no “one-size-fits-all” template for what a cohabitation agreement should specify, but here are some common examples of provisions that a couple might include:

  • Addressing real property and who is ultimately responsible for paying the mortgage

  • Naming the responsible party for paying rent on a rental property

  • What will happen to the owned or rented property if the couple should break up

  • How long a party has to move out upon a break up

  • Naming the responsible party for paying bills, utilities, insurance, and other required expenses

  • How to divide personal property that was acquired together

  • Clarifying whether personal property acquired before the relationship (or living together) remains separate

  • Naming the party responsible for certain debts incurred during the relationship

  • Whether either of the partners are responsible for paying any financial support if there is a breakup

  • Determination of child custody and/or visitation rights (if applicable)

  • Options for mediation before any disputes are escalated to court

What is a Power of Attorney?

A Power of Attorney is an important estate planning document that allows you to appoint an agent who can act in your place. There are several types of POAs who can serve in different capacities, but unless specified, assume it is a General Power of Attorney.

A POA is a fiduciary, meaning they have the legal right and responsibility to step in and act on your behalf when you are unable to do so yourself. They can do things like pay your rent, file your taxes, or even buy life insurance on your behalf. A great POA will ensure your personal and business operations continue running smoothly even when you are absent or incapacitated. To learn more about a Power of Attorney, along with different types of POAs that you can appoint, click here

What can Power of Attorney specify?

An individual can name a Power of Attorney who has the legal right to step in and act as their agent. They can make important decisions on that individual’s behalf, including life decisions. Here, you may be wondering how far these rights can extend. 

Here are some examples of the duties a Power of Attorney document can specify:

  • Make decisions related to the Principal’s personal, business, or financial decisions

  • Start bank accounts, write checks, and pay bills on behalf of the Principal

  • Sell real property for the Principal

  • Receive and deposit the Principal’s income

  • Purchase life insurance policies in the Principal’s name

  • Open a lawsuit and sign legal documents on behalf of the Principal 

  • Arrange medical care and decide on long-term living arrangements

  • Review and select doctors and caregivers for the Principal

  • Make healthcare decisions on behalf of the Principal

Cohabitation agreement vs Power of Attorney - what’s the difference?

As you may have gathered, a cohabitation agreement and a Power of Attorney are very powerful yet very different from one another. A cohabitation agreement primarily addresses the division of property as well as financial obligations if a couple were to split up. In contrast, a Power of Attorney is used to give another individual the legal right to step in and act as your agent should you become incapacitated. A cohabitation agreement does not give your partner any legal rights to act on your behalf. 

Should I use a cohabitation agreement or a Power of Attorney for my estate plan?

Although a cohabitation agreement vs power of attorney are very different from one another, it doesn’t mean that you have to choose. To the contrary, it could be beneficial for an unmarried couple to use both types of documents in conjunction.

An unmarried couple does not have the same legal rights as a married couple. Because of this, it makes sense to add in measures and protections where possible. Both the cohabitation agreement and Power of Attorney are great examples of tools that are available to unmarried individuals. 

The cohabitation agreement could be used to predetermine how property, responsibilities, and financial obligations should be divided should the couple break up, or if one of the partners were to pass away or become incapacitated. In addition, each partner in the couple could set up a Power of Attorney document and name each other as their respective agents. The Power of Attorney could make it much easier for someone to step in and manage the personal and business affairs of their partner if they become incapacitated. 

Further, each partner in the relationship should be sure to set up a Will as well. Next-of-kin rules usually only distribute property to married spouses and the closest blood relatives. If an unmarried couple would like to leave their property and assets to one another after their death, specifying these wishes in their Wills  is the surest way of making this happen.

Wondering how to set up a Will, Power of Attorney, or Cohabitation Agreement? Trust & Will is here for all of your estate planning needs! You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning and settlement  options today!

Is there a question here we didn’t answer? Browse more topics in our learn center or chat with a live member support representative!

Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.


Subscribe to our newsletter for expert estate planning tips, trends and industry news.

    • Trust Pilot
    • Pledge 1%
    • Better Business Bureau Accredited
    • SOC2 Certified