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I am about to move in with my girlfriend/boyfriend of three years. Do I need to prepare myself financially for this?
Absolutely. Today, many couples—young couples just starting out, older couples who prefer not to marry, and same-sex couples—are living together, accumulating wealth together, and buying property together, and they require many of the same financial and legal protections that married couples have. In some instances, they require added protection, since—if they eventually split up and divide their assets—they have few of the automatic legal protections that married couples have.
A note: Some unmarried couples choose not to marry because they dislike the prospect of being bound by a legal contract. Some think marriage is just a formality; others have been married and burned, and don’t want to make the same mistake again. Whatever your reasons for not marrying, you should be aware that without a written agreement, you may be legally vulnerable in a number of ways.
How am I vulnerable if I live with someone without an agreement?
To take a typical case, consider what might happen if you and your live-in partner decide to buy a home together. If your partner is making a larger contribution to the down payment than you are, it may seem to make sense to hold the property solely in your partner’s name. But if you split up, guess who gets the house? Your partner does. Or say that both names are on the title, al though you contributed a larger amount for the down payment. What happens if you split up? You could lose your larger share and only get half. Or perhaps you assume you have the rights of joint tenancy with your partner—meaning that, if your partner dies, 100 percent of the house will go to you. But when he dies, you discover that you misread the title and that instead of being a joint tenant, you are a tenant-in-common. This means that your partner’s share of the house goes directly to his estate, which he may have left to his younger brother. By law, the brother can move in with you. Property can become a troublesome issue without a contract.
Are there any other problems I can get into without a contract?
Yes, especially if you separate. If you have been financially dependent on your live-in partner, for example, without a contract you will have no legal right to receive ongoing financial support from him or her. Also, you may have no right to share in any of the assets your partner may have accumulated, perhaps with your help, during the years you lived together. This may or may not come as a surprise to you, but it has caused real grief to many long-time partners who assumed they would be provided for, but weren’t.
Other issues can arise. What if your partner becomes sick, so sick that he or she can’t make medical decisions? He or she may have expressed to you a firm wish not to have any extraordinary medical measures taken. Well, guess what? If your partner’s closest blood relative wants to have him or her hooked up to a ventilator, you have no legal right to stop it. And what if you and your partner have agreed that you will inherit each other’s estates in the event either of you dies? Without a will, in the eyes of the court, you are not your partner’s legal heir, as you would have been if you were married.
Is there any way I can protect myself financially while my partner and I are living together?
Yes. But before we get into cohabitation agreements, there are a few basic things that you should do. First, make all your financial expectations and intentions very clear to your partner. If you give him or her $500 as a birthday gift, write the word “gift” on the check so that, in the worst-case scenario, a court will not view this check as evidence of a promise to support your partner. If you make a loan that you expect to be repaid, write “loan” on the check. Never put money in a joint account just because you think it will add trust or convenience to your relationship, and don’t put both names on a title unless you truly want to be joint owners, by which I mean fifty-fifty.