Around 80% of Australian couples live together before they get married. While these days it is a common and practical situation, the reality is, it can come with dire financial consequences if things go wrong. As a generally rule, if a couple live together for longer than two years then they have a claim over the assets of the relationship similar to as if they were married. So living together without being married can still end up costing you half your assets in the event of a separation. Robert Wood and Associates are the solicitors Melbourne locals have trusted with relationship matters for over 30 years. Here’s some smart tips to protect yourself financially if you are in a serious relationship.
Consider a Co-Habitation Agreement
Co-habitation agreements are simply pre-nuptial agreements for couples that aren’t married. If you don’t plan to marry your partner any time soon, such an agreement might make you feel more financially secure. An agreement such as this would protect both parties and their assets as well as define the relationship, property rights and liabilities between the two of you.
Think About Property Ownership and Renting Options
If you are considering buying a property together, how you own a property is also an important decision. There are two choices:
- Tenancy in common – this assigns each partner direct ownership of a nominated portion of the property. Each partner is responsible for their own mortgage and share of the property.
- Joint Tenancy – this is an agreement which means each partner is jointly and severally responsible for the entire property and the mortgage.
If you’re renting, ensure your name is also on the lease. If the relationship breaks down and one of you has to move out, the person whose name is on the lease is in the best position to maintain possession of the space. If both names are on the lease, both people have an equal opportunity to remain in the property and renew the lease.
Keep Records
Protecting the assets you brought into a relationship begins with good record keeping. You should get assets valued at the time the relationship starts and clearly value any assets from inheritances and windfalls. Ensure you document accurately who pays for what when you move in together, including moving expenses, security bonds, furniture and appliances. Also keep track of monthly expenses such as rent and utilities. In the unfortunate event of a breakup, documentation of all expenses will make the process of dividing assets much easier and ensure there is no dispute over who gets what.
Maintain Financial Independence
Think carefully about having a joint account. While it may seem like a logical step when you are in a serious, long-term relationship with someone, money can complicate things, even in the best relationships. Having a joint account means both incomes go to one place and funds for all necessary goods and services are taken from there. While merging finances may seem romantic in theory, you may find it isn’t always for the best. For instance, you might discover your partner is taking more from it than you are for personal reasons, or you may find that your partner is a real spendthrift while you are more of a saver. This can easily escalate into resentment and arguments. If you do decide on having a joint account, then be smart about it. Agree on which purchases are allowed to be made freely and which ones require consultation with each other. You should both be open to discussion if either of you feels what is going on in the account is inappropriate.
Whether you are entering into a new relationship, moving in with someone or considering marriage, it’s a wonderful thing to be in love and to trust another person unconditionally, however, in terms of finances, it is also important to look after yourself and plan for all possible future outcomes accordingly. Taking steps to protect yourself now, may save you much heartache down the line.
The team at Robert Wood and Associates are the experienced and trusted solicitors Melbourne couples and families trust for expert legal advice. Specialising in several areas of law, including family law, wills and probate, and Estate planning, we have the expertise and solutions to assist you. Call us today.
