Did you know that there is a prenup for unmarried people who choose to live together? This is mostly for couples, but could also work for friends.
It is a cohabitation agreement and it works the same way a pre-nuptial agreement works.
The two of you sit down and decide how joint assets will be allocated should things not work out.
Now, I get it, no one wants to enter a relationship planning for the end. We all want to live happily ever after, just like all those Disney movies promised us.
But, given the odds- and that most of us have either seen the end of “til death do us part” or heard the horror stories- would you rather have peace of mind that both of you are covered, even if you never need it, or find yourself being one of the next horror stories?
The beginning of the agreement should be pretty simple- you list each of your current assets and agree that you leave with whatever you brought to the relationship.
The next part may be a little more difficult.
How do you divide the things you purchased together? If you are each contributing an equal share to joint purchases, it is an easy 50-50. However, if one of you makes more or has less expenses and you decide to contribute unequal amounts, you need to decide how to handle the distribution.
In most places an inheritance is not considered joint property… unless you comingle it with jointly owned funds or jointly owned investments (for example, fixing up your jointly owned house). If you decide to do this, you may want to first agree how it will affect what percentage of the house belongs to each of you.
What will you do with assets you purchased together? Will one person have the right to buy out the other person or will you sell the asset(s) and split the proceeds?
What will you do if circumstances change and one of you cannot contribute, whether short or long term? (Okay, in full disclosure, this one is personal for me because my now-ex-husband decided he could not keep a job after we were married. Learn from my experience. Please.)
If you take emotions out of the equation, it just makes sense.
We, as women, tend to think with our hearts, especially at the start of the relationship. But, even when separating, we are more likely to give him “the benefit of the doubt” and are blindsided when he takes everything he can and leaves us picking up the pieces of our broken hearts and the crumbs he has left us.
Now, I am not saying that all men are bad or anything like that. I actually think most men are inherently good, wanting to protect their girlfriends, wives, and daughters. If your man truly has your best interest at heart he will want to do everything he can to ensure you are protected.
And, even those in nonsexual relationships can create a cohabitation agreement. If you are moving in with a friend, this could be a way to ensure you both know what will happen to household items you purchase together, like a couch or table.
Before deciding if a cohabitation agreement is right for you, check with the laws in your state to see how things are handled if an agreement is not in place.
Planning for the future is what Money Masters do.
If you want to learn more you can DIY it within the free How To Be A Money Master fb community, or you can email me about my Money Mom Academy, an 8-module program for women who want to really understand money, finances, investing, and money mindset so they can live life on their terms, create a better future for their families, and help those in their inner circle. It includes weekly group zoom calls and bi-monthly 1:1 calls so there is plenty of support and, best of all, there is no expiration so you can learn on your schedule and keep coming back to dive deeper into each of the topics.