A large percentage of couples move in together before marriage. Although this may feel natural to them, the move can have many consequences, like not protecting your assets if the relationship runs into trouble.
A general rule holds that if a couple has stayed together for at least two years, each person has a claim on the assets of the relationship. Much the way of things if married.
Thus, cohabiting without getting married could still cost you half your assets if you should separate. Worse, there’s little or none of the financial protection you would have legally possessed in a marriage.
This makes it even more crucial to lay out some ground rules before you pack up and move in together. The following tips will help to protect your assets and ensure that money won’t interrupt your romantic bliss.
Establish a Relationship Agreement
You don’t necessarily need a comprehensive relationship agreement. But it could be worthwhile to write down the basic terms of what each of you will be doing in the relationship.
The agreement should describe how you intend to split expenses. Who will pay the bills, are you going to pay the rent every month or will each person contribute half the mortgage? What about eating out, repairs, groceries, or furniture?
Having a relationship agreement in place might seem cynically formal, but trust us, it will be calming to have certain details written down at the start instead of getting into arguments about them later.
Write a Will
If you’re thinking about moving in together before marriage, a will could make a substantial difference for both of you. Without it, your partner will be left with nothing and no one will look after him or her.
Fortunately, you can protect both your family and assets by writing a last will and testament. This document shows who you want to pass your estate to once gone.
Be Cautious About Mixing Finances
You might be living together, but that doesn’t mean you should rest your credit ratings on your partner. Also, you don’t have to add the other person to your checking account or use each other’s credit cards casually, and at will.
Suppose you experience a fight or even a breakup. Imagine the damage the other individual could do if he or she decided to go on a shopping spree with your credit card(s).
In addition, if you decide to open a joint account where both of you will place a certain amount of money to pay bills and mortgages, it’s a smart plan to keep your individual savings and personal checking accounts.
Good recordkeeping is a vital step for protecting your assets in a relationship. It would also be a wise move to estimate the value of your assets before cohabiting.
Make sure to track all the monthly expenses such as rent and utilities. That way, if something goes wrong, your records will simplify the process of sharing assets. They’ll also reduce the chances of a quarrel over who gets which portions of the asset.
Discuss All Joint Property
Do you plan on buying a house? What if you already have your own house? Will your partner pay rent to you or get added to the deed?
These vital questions need settling before you live together. Keep in mind that if you want to buy a house and keep it under your name, you may sell it later and retain all the proceeds regardless of whether your partner shared payments on the mortgage.
On the other hand, once your partner has been added to the deed, this means that he or she is entitled to half the money when the property is sold, even if you paid the entire down payment and mortgage by yourself. So you must practice caution when adding your partner to your deed, especially if you are paying most of the housing expenses.
Remember that even a seemingly perfect relationship might fail, and you could lose your assets. It will be better to have a cohabiting agreement that lays out the details.
It is a great experience to be in love. If you enter a new relationship, however, whether marriage or cohabitation, look after your assets.
Plan for any potential future outcomes. Take the necessary steps to safeguard your finances now. Plus, protect yourself from future worries.