In today’s brave new world of dating, mating, and personal finance, couples who are moving in together may well be considering a “dating prenup.” What is that, you ask? Well, I’ve never heard of the term either, until I started Googling. A prenuptial agreement is a legal document that spells out what happens to a couple’s assets and liabilities in the event of death or divorce. A dating prenup is like a prenup for unmarried couples who move in together (and thus have none of the protection or guidelines offered to married people), providing terms and guidelines for a host of issues surrounding a breakup.
There might be some cohabitation in the not-so-far off future, and while CB and I have casually discussed the financial mechanisms of such a move, we haven’t really drilled down to the nitty-gritty. Despite a penchant for all things personal finance, I don’t particularly want to make everything out to be so, well, contractual. In other words, we both agree that if we make different salaries, it’s fairer to divide the rent according to percentage of total income instead of 50-50. But we don’t (nor do we plan to – I hope) expect the one person to reimburse the other for a gallon of water that was not equally consumed.
When I typed in “moving in together finances” into Google, however, most of the websites that popped up mentioned the importance of a moving-in-together contract. There are many names for this phenomenon: dating prenup, cohabitation contract, written agreement, pre-prenups, live-in contract, etc. I think prenups are generally a good idea (especially for community property states), but I’m surprisingly lukewarm to the prospect of drafting and signing a live-in contract with CB.
According to Kiplinger, though, I’m letting my heart rule over my head. Kiplinger says that it’s essential to put your arrangement in writing:
This little piece of paper can help you keep your trial of domestic bliss from becoming a nightmare. In it, you should detail how much each partner will pay for rent, who will cover what household expenses, when bills are due, and other space-sharing arrangements.
The article even helpfully provides a sample cohabitation agreement. AOL Personals shares horror stories of couples who didn’t have a cohabitation agreement and ended up fighting over a pen. NY Post reports that more NYC couples are signing dating prenups. In addition to the more mundane financial aspects of living together, these pre-prenups can also set the terms of pet ownership / visitation after a breakup, expectations for graduate school support, even who pays for a termination of pregnancy, etc. A recent CBS News did a segment on this trend, featuring a real life couple who has a dating prenup.
As sensible as these dating prenups seem though, I just can’t muster much enthusiasm for them. Part of the reason is because CB and I don’t have combined finances (unless you count our joint savings account for Galapagos), and we have no plans to enter into major asset purchases before we are married. We are both fairly financially-responsible. We have been in a committed relationship for a long time.
Part of the reason is good old-fashioned optimist: I don’t think we will break up, though of course there are no guarantees. Or, if we do, I harbor the hope that in the event that we break up after we move in together, we will both behave with grace, dignity, and respect for each other. But I understand the prudence of a cohabitation agreement for couples who do have significant assets together, or if one partner would be giving up a job to move in with the other person.
My question is: Did you have dating prenup before you moved in? If so, what did you include? If not, how did you decide to forgo it?
You May Also Want To Read :
It's official. CB and I just put down the security deposit for our apartment. We will be signing ...
CB and I discussed the possibility of us combining our car insurance policies once we move in to ...
The blogosphere is a buzz with this (relatively) new New York Times article on men, women, expec ...
{ 7 trackbacks }
{ 34 comments… read them below or add one }
Many people can't stand Suze Orman, but her last episode talked about prenups. I found it quite interesting even though I never considered one before our marriage. She said that it's better do set a prenup in love rather than in hate. Quirky, I know, but I think it does make some sense.
"it's better do set a prenup in love rather than in hate." I agree 100%. But that doesn't mean it's not awkward to bring up the topic.
I read a lot about this, too, when I was considering moving in with (X)BF. When I presented the idea to him, though, he FREAKED OUT. He definitely didn't like the idea, and so I dropped it but insisted that we had a very clear discussion on how we'd split expenses, and what would happen if we broke up while we were living together. I was adamant that even though i was only working part-time (then) that we would act like roommates until we made a more official deal (ie marriage). So, we split everything 50-50, and when it came time to buy furniture, we decided in advance who would get each piece if we broke up. all the other expenses, such as groceries for him, i kept track of and he paid me back by paying more of the rent at the end of the month.
also, if things go down badly…you will be glad you talked about all this BEFORE things got nasty. It is virtually impossible to escape a breakup without some ill will, so while I hope you guys don't ever have to face that situation, it is good to have a back up plan to refer to, e.g., which one of you gets to stay in your place if you break up? does it depend on who did the breaking up? etc. It can be a nightmare if someone says one thing and then isn't willing to follow through on their verbal promise…that is where having it in writing comes in handy.
I just thought of the movie The Break Up. I always figured that if we were to break up after we move in together, I wouldn't want to live in the place anyway. I guess that's another reason to keep the E-fund fully stocked.
no we did not have a dating prenup, first of all we were best friends before we started dating, we have known each other for four years and have just started dating recently, anyway, no we didn't have a moving in contract, our deal is that if things are over, we take what we brought in, he takes his stuff, I take mine, and we head separate ways.
We don't buy stuff together either. If one of us buys something, we usually share it with the other, here's an example. When I moved in, he bought the tv because he didn't have a tv, he's been living without one. He likes to mostly save his money, anyway he bought it because he said "I knew you'd be bored without a tv" and we both use the tv to watch movies. It was very sweet of him to do so.
However, I know its his tv, should we ever break up, he walks away with it and I'll just buy my own. I'm 27 and he's 3 years older than I am. Hey it works for us. Also in our relationship we take turns buying dinner, doing chores, and we share a lot of our stuff together. We try to respect each other's stuff.
Man, I wish I had known about this stuff when I dated and then lived with two of my exes. It would have saved me over $50,000.
Didn't do a prenup, none of my friends have either.
We each moved into the 1-bedroom apartment with furniture, and if things end, we'll each take our furniture. The only joint item that we have is a fish tank, and our mattress/box spring. Everything else was individually gifted/purchased, so they would remain our own items if things end.
In terms of the apartment, I think we would both be moving on, since it's too expensive for either of us to carry on our own. I love it, but I wouldn't want to double my rent amount to stay there!
Joint expenses – we split 50-50. I do add some extra $ to joint expenses if we're going overboard on food, or I'll allocate some expenses to my own expense chart (our costs went up since switching to smoothies daily for breakfast, instead of toast/cereal, and striving for 2 dairy servings a day!). We have a separate account that we deposit joint expenses into, and then pay off the credit card that was used for purchases (I tend to pay for everything with my credit card for points).
I don't like the idea of a pre-nup before marriage (for me at least), so I certainly don't like the idea of moving in with one. If you don't know the person you are moving in with (or marrying!) well enough to be sure they will be a mature adult should a break up ever occur, why are you moving in with them in the first place? Sounds like maybe you should get to know them a bit better first.
Saying that, me and my live-in boyfriend did have these discussions before we moved in together last year, but we certainly didn't put them in writing or make it anything official. And the idea of saying that our cat only belongs to one of us seems to completely defeat the purpose of adopting her together!
At the very least, you need to have a mutual understanding of what will happen if the "hope it never happen" happens. Who will stay in the apartment and who will move out. I have seen too many couples trapped together in an apartment because neither could afford the rent alone.
No – we were definitely on the marriage track and got engaged within after month of moving in together.
We also didn't combine finances, so financially speaking, it wasn't much different than living with a roommate. Except we did get a joint credit card for all joint spending. I guess some could see that as a risk, but he was the owner and i was just authorized anyway!
Chad and I lived together for 5 years before getting married, but we never really considered a prenup. The key thing is to buy items separately and that way you don't have to argue over who gets the mattress, who gets the blender. Whoever bought it gets it.
Then again, I wish I'd had a contract with a roommate I lived with in college. She tried to steal my blender!
I've read that you should keep the receipts for the larger purchases, because I suppose if an ex was really vindictive they can say that they chipped in money or bought it when it's not true. Although even having to plan for that type of behavior can be quite depressing.
We had one; it laid out what furniture belonged to who, and the procedure for splitting jointly-purchased items if we broke up. It also discussed household responsibilities (I was working part-time so I also did more housework) and who was responsible for which bill.
We never actually referred to it but we felt better having it; I firmly believe it's better to have it and not need it than regret not having it later.
There was definitely no moving in contract, although we had discussed how we would pay for things (we didn't do 50/50 because at the time my husband made significantly more than I did), and ended up combining finances after we got engaged but before we got married. We also didn't have a prenup before marriage, as by that time we had a good system going and didn't need to hash out all details of expenses. We are somewhat old fashioned in that we combined all finances, have multiple joint accounts, we both are on the mortgage, although our cars are separately registered (jointly insured though). If something were to happen we will just face it as it comes, which I know can sound naive of me, but at the same time neither of us entered the marriage with significant assets that we needed to protect. We are also not planning to have children, which would make things infinitely easier should we not end up together someday.
In theory I think they are useful and maybe even imperative, but in reality I’m not sure I’d ever be comfortable suggesting one to my boyfriend. Of course I wouldn’t really consider moving in with a boyfriend either. I think the key is to keep all assets separate no matter what. Don’t split purchses, or else you really do need to put in writing who will keep what if you break up. Honestly I think a contract would be more useful if it outlines what you’ll each be responsible for if you stay together. Who pays for what (household bills, food, travel), who takes care of what (pets, cleaning, debts that may benefit you both, like student loans), whether and under what circumstances you can lend each other money, and under what circumstances one of you can kick the other out, etc.
Meg´s last blog ..Income vs Fixed Costs Summary of my Rentals
"In theory I think they are useful and maybe even imperative, but in reality I'm not sure I'd ever be comfortable suggesting one to my boyfriend."
Exactly. In theory it all sounds very sensible and good, but there's something vaguely unsettling about spelling out the little things. I would feel very differently if we had major assets together though.
No, we were best friends for years before we started dating and moved in. We buy items separately and keep cash and bank accounts separately but if one of us buys something we usually share it with the other. =)
We don't have a dating contract of any kind, but so far (three months in), everything is working out fine. All of the bills are in my name, he writes me check for his half every month, we take turns buying groceries and meals out, and whoever happens to notice the toilet paper or toothpaste is running low grabs some at the store. Truth be told, I've probably been paying for more things than he has, but I make more money and have a more stable income right now. So I'm fine with that. Plus, if I buy more of the groceries, etc., I have more of a say in what gets bought (whole-wheat v. white flour English muffins, organic stuff, etc.–which is more important to me than to BF) and what meals are cooked during the week.
I don't know if I would want one for marriage but in the times we live in that chances are we will have a few serious relationships under our belt where there will be co-habitation but no legal rights I think it would be a good idea. I am on live in bf #3 and I think if I had done it with live in bf #2 I would be a lot richer.
We have been together for over 5 years, and moved in together about 8 months ago. We don't have any sort of written agreement. Our situation is pretty straightforward – we earn approximately the same amount of money and just split everything down the middle. We each pay for half of the rent and utilities (I pay, he reimburses me, since he moved in to my place and everything was already in my name), and keep track of our food/household/entertainment spending. We don't have any joint accounts, and while sometimes that seems like it would make things easier, it's really not a big deal the way it is. I have an excel spreadsheet where I track my spending that is for "us" (the bills, groceries, etc), and at the end of the month, he enters in what he spent. Sometimes one of us will treat the other to dinner or a concert, and we won't enter it into the spreadsheet, but mostly it all just gets divided in half. When we move, we will probably put some of the bills in his name and some in ours, or he will pay the rent and I'll cover bills, etc…but we'll always tally it up at the end of the month. Since all of these "split" purchases are things that get used up, it's not like we're going to fight over them someday.
We have not made any big purchases that would be an issue if we were to break up (I bought the washer/dryer before he moved in, and most of the furniture was mine anyway), but I suppose it could get tricky if we were to jointly purchase a TV or something large like that.
Like you said, I honestly believe that were something to happen, we would be able to handle it in a civil manner. I know plenty of relationships end badly, but this is something I have never thought about as a potential issue. I think it's a much larger concern if you have shared debt or shared property etc…but I don't even know that I would really need a prenup for marriage – maybe that's just because right now we don't have anything that we'd fight over
I should mention as well that most of our furniture, household items (pots and pans, linens), etc. are mine…he went from a large house with many roommates (and not that much stuff) to living with me (I was living alone and had a whole apartment full of stuff). So it's not like he'd say "Well, I want the bed. That was yours. Because you bought it." or "Well, I want your grandmother's dining room table."
Having an interest in family law (and being slightly obsessive when it comes to planning), I've seen how things can go wrong, and I'm all for cohabitation contracts and pre-nups, especially when there is a disparity between the two parties. Mr. Cash, on the other hand, is a little more laizze-fair about these things. When Mr. Cash and I moved in together, apart from combining our DVD and CD collection and furniture (the rest went into storage) we came up with an oral agreement as to payment of rent, bills, etc, but nothing in writing. We also have the law on our side: couples who have been together for 2 years are considered de facto and can apply to the family courts for mediation or judgements should things go sour.
I also find family law fascinating. Can you elaborate a little more on the 2-year thing? That varies by state, right?
"couples who have been together for 2 years are considered de facto and can apply to the family courts for mediation or judgements should things go sour"
I had no idea! Is this nationally, or on a state-by-state basis (if the latter, what state are you in)?
The legislation governing recognition of 'domestic partners' (the PC term for de facto or same sex couples) is pretty homogeneous across the states of Australia. The only stand out is, South Australia, where the requirement is a five year continuous relationship (or 5 year aggregate over 6 years). The other states and territories (ACT, NT, Queensland, Western Australia, New South Wales, Victoria and Tasmania) all have a two year minimum. While you can register your relationship to ensure certainty, the courts will pretty much deem you to be in a domestic relationship if you meet the minimum, and all the rules relating to division of property can then be applied if you take the matter to court. Pretty neat, huh?
Ah, Australia. No wonder I hadn’t heard of such a law. I’m pretty sure it doesn’t exist in the US, though please someone tell me if I’m wrong!
Kim´s last blog ..Teeny Tiny Awesome
I really do believe having a pre-nup is a precursor for a failed relationship. Gotta jump in with both feet, and now what you're getting yourself into and risk it all!
I'm with you Sam!! But I think at the dating stage maybe a pre-nup is a little intense but definitely having a conversation about shared responsibilities and expectations is in order. I mean living together is a pretty big step and where finances co-mingle the communication has to be more than transparent. I'm a romantic what can I say. If you really want to keep assets separate there's always options in utilizing trusts – nothing keeps assets separated from people like court appointed third parties
I agree with Financial Samurai. Relationships will always be a risky business and nothing in life is guaranteed. Sometimes you have to just go for it!
I have seen couples break up that I thought would last forever. However, most of these couples got together right out of college when there was nothing to 'prenup' about.
I would think most people that are living together are not combining their finances anyway. If they were, then they might as well be married.
I didn't but most of my assests are protected by a family trust so not really worried
That's a good idea to split things according to percentage of income rather than 50/50. I am making more money than my boyfriend right now, but he still wanted to do it 50/50. I'll chip in more for groceries or something, I guess. My boyfriend and I have been looking for a place to buy and are planning to pay for it 50/50 (equal down payment) so that *knock on wood* in case we break up, it won't be so much of a headache to divide the place up. Not meaning to toot my own horn- but I wrote an article about Cohabitation Agreements here: http://youngandthrifty.ca/relationships-money/coh...
My! What an insightful read. This has opened my eyes to a whole lot of stuff that I never knew about before. Thanks for spending the time to write this up.