Why is it Worthwhile to Enter into a Cohabitation Agreement?
Not all couples wish to formalize their union with a wedding. There can be many reasons why a couple opts for cohabitation, meaning a non-marital partnership. However, the legal and financial consequences of this status must be carefully considered. Therefore, even in cohabitation, a contract can help clarify all these questions. In this article, you will learn about the advantages and disadvantages of cohabitation compared to marriage, and why entering into a cohabitation agreement may be beneficial.
What Is Cohabitation?
The number of non-marital partnerships in Switzerland is increasing year by year. Whether this is due to a rising number of divorces or simply reflects a change in couples' lifestyles is not clear. However, it is evident that this lifestyle suits a large number of couples. Cohabitation refers to the status of a couple living together under one roof without being married. Cohabitation is not regulated in the constitution, meaning the law does not automatically recognize shared protection between life partners, who are considered as individuals under the law.
The Advantages of Cohabitation
Choosing to live in cohabitation offers several advantages for couples, primarily of a financial nature, such as tax savings. Couples in cohabitation benefit from tax advantages compared to married couples. This is mainly because they file their tax returns separately despite living together, allowing their incomes and assets to be taxed independently. As taxation is lower in this case, cohabiting couples have an advantage over married couples. Additionally, a cohabiting couple can each receive individual AHV pensions if both partners are employed, totaling up to 4,780 CHF. In contrast, married couples receive a joint pension capped at 3,585 CHF, which is a quarter less.
The Disadvantages of Cohabitation
However, there are many areas where marriage provides better security than cohabitation, which can be considered as disadvantages of cohabitation. Since Swiss law views both partners as separate individuals, they do not share social and legal protections.
No Protection in Case of Death or Separation
In the event of death, the surviving partner in a cohabitation does not automatically inherit or have any claim to the deceased partner's assets. They also do not receive a widow's or widower's pension from the first pillar (Old Age, Survivors' and Invalidity Insurance, AHV). Benefits from the second pillar (occupational pension) may be paid to the life partner under certain conditions determined by the respective pension fund and contract. However, upon death, the surviving life partner may find themselves without financial means and no legal entitlement to their deceased partner's estate.
The same applies in the event of separation. Unlike marriage, there is no community of property in cohabitation, which can have serious consequences, especially in terms of financial claims. Furthermore, it is not possible to claim maintenance for a partner who has managed the household for many years and now finds it difficult or impossible to re-enter the workforce. Therefore, it is advisable to address these issues in advance through a cohabitation agreement.
Cohabitation and Parental Responsibility
If cohabiting partners have children together, the biological father must apply for parental responsibility to exercise joint or shared custody over the child. By default, in the case of non-marital children, the mother is considered the sole holder of parental responsibility (Art. 252 and 260 CC). Therefore, the child also automatically bears the mother's surname if the father has not established paternity.
Why Enter into a Cohabitation Agreement?
Many aspects of social and legal protection are not legally regulated in this type of cohabitation. Therefore, this status can potentially lead to problems for one of the partners, particularly in the event of separation or death.
If both partners are employed, there are no disadvantages in terms of AHV or occupational pension. However, if one cohabiting partner takes care of the household and stops contributing to AHV during that time, and payments to the occupational pension are halted, in the event of separation, this partner would not be entitled to maintenance payments, as would be the case in divorce. Therefore, it is advisable to address these issues in advance through a cohabitation agreement.
Legal Validity of Cohabitation Agreements
Cohabitation agreements are not provided for in the law and are therefore neither mandatory nor formally regulated. Their content and form can be freely designed. However, it is advisable to document all agreements in writing to ensure they are enforceable. A family law attorney can assist with this process.
Cohabitation agreements can be mutually agreed upon by the life partners, and it is recommended to consult an attorney specializing in family law who can analyze each individual's situation. However, if the cohabitation agreement includes inheritance matters, it must be notarized to be valid.
What Should Be Included in a Cohabitation Agreement?
A cohabitation agreement allows you to address questions of retirement provision and risk protection. This initially requires an assessment of the individual insurance and pension situations of the cohabitants. In general, a cohabitation agreement should include at least the following points:
- Division of labor in the household and financial contributions of each partner
- Inventory of assets
- Management of shared accommodations
- Representation authority of the other partner
- Legal relationships with the children of one partner or the couple
- Separation arrangements
Cohabitation Agreement and Rental Apartments
In the case of cohabitation, only the tenant who signed the lease has exclusive rights to the apartment. Therefore, they can exclude their life partner from the shared residence at any time and are solely responsible for paying the rent. To avoid this, it is recommended that both partners sign the lease agreement.
If this is not possible, a cohabitation agreement can help resolve these issues by specifying who may continue to reside in the apartment after separation and under what circumstances one partner must vacate the shared residence.
Cohabitation Agreement and Retirement Provision
A cohabitation agreement also allows couples to address retirement issues. Under the current system in Switzerland, cohabiting partners do not benefit from the social protection of their life partner in terms of benefits from the three pillars. In the event of death, a cohabitation agreement can protect the surviving partner, especially through the purchase of life insurance.
Cohabitation Agreement and Contributions to Common Livelihood
One of the most important points to address in drafting a cohabitation agreement is the participation in the common livelihood of each partner. This is because the legal provisions of marriage do not apply in the case of cohabitation, so there is no mutual duty of support, no rights and obligations after separation or death.
Therefore, it is crucial to organize and evenly distribute household tasks (household, family, and work) between partners. For example, if one partner gives up their job to take care of the household and children, they lose contributions to AHV and occupational pensions. In the event of death, separation, retirement, or disability, this partner may then face financial difficulties and not receive sufficient benefits to maintain their standard of living. In a cohabitation agreement, you can agree on how these losses should be compensated and contributions to household and livelihood should be balanced.
FAQ: Cohabitation Agreement
Unlike spouses in a marriage, both partners in a cohabitation (Konkubinat) are considered independent individuals under Swiss law. Life partners do not share their social and legal protections and are taxed separately.
A couple living in cohabitation can have financial advantages over a married couple. This is because life partners are taxed separately. Additionally, they can each receive an AHV pension, with the total amount possibly being higher than that of a married couple.
Life partners do not enjoy the same protections that the law provides for married couples. In the event of death, the surviving partner has no claim to the deceased partner’s AHV and can also be disadvantaged in terms of assets.
In the event of death, the surviving partner has no claim to the inheritance or a share of the deceased partner’s assets. It is possible to create a will to bequeath property or assets to the life partner, but the minimum share for children and family prescribed by inheritance law must be respected.
Unlike marriage, cohabitation does not entitle the surviving partner to a widow’s or widower’s pension from the first pillar (AHV). Only in certain cases is it possible for the surviving partner to receive supplementary benefits from the second pillar, known as the occupational pension (Pensionskasse).
The cohabitation agreement can be freely designed by the life partners in terms of both form and content. Notarization is only required if the agreement deals with inheritance matters.
A cohabitation agreement provides a legal framework for the non-marital cohabitation of a couple. It particularly regulates issues of joint property, each party’s financial contribution to shared living expenses, the shared residence, and the relationship with the children.