The pandemic has had a polarizing effect on many aspects of life, love included.
In some cases, the shock pushed apart relationships already under strain. But it also brought some people together faster than they ever could have anticipated, as many hastily shacked up in a rush of lockdown-induced intimacy.
Be careful and take a few precautions. Even with the best legal planning, your assets may still take a walk if you split up.
Of course, I’m sure you don’t plan on splitting up — or fighting over your assets. But close to half of marriages end in divorce, and non-married couples call it quits, too. The property rules that will govern your financial split in the U.S. are exceedingly arcane. Every state has surprising statutes that are neither intuitive nor necessarily fair.
“I tell my very wealthy clients, ‘Don’t even go on a date without getting a release first,’” said attorney Sandra Mendell of Jaffe Family Law Group in Los Angeles. “I’m kind of joking, but with some people it’s true.”
Partnership can dump your assets into a blender of legal subjectivity. For instance, if a married Californian refinances her home, her spouse gains some ownership, even if she owned the property outright. That’s because all proceeds from loans are considered “community” property in California. Totally intuitive, right?
To help protect you from this expensive, emotional morass, we asked divorce lawyers for their best advice on how to protect you from any surprises.
Get a cohabitation agreement, immediately.
The minute you think you’ll be moving in together, lay out your financial relationship with your partner — in a contract.
Without something written down, your relationship can later be defined by the whims of state law, the mood of a judge or arbitrator, and the emotional functioning of your ex.
Yes, the conversation you’ll need to have to get this process started will be awkward, but it will protect you both.
Let’s say that before getting married, you dated someone for four years and shacked up. In one nightmare scenario, your ex could claim that you were in a “domestic partnership” or a “common law marriage” while dating and pursue a cut of your income and asset appreciation. You could potentially avoid all this with a one-page contract.
Though you can draft your own cohabitation agreement based on an online template, don’t do it. These agreements can be contested on grounds that one partner didn’t fully comprehend or was manipulated into waiving rights. If both of you are represented by separate attorneys, the agreement will be more difficult to contest. Also, you cannot write a smart agreement without thoroughly understanding your state’s approach to your particular income and assets, and an attorney consultation would be helpful with that.
First comes love, then comes your prenup.
Let’s say you’ve lived together — with a cohabitation agreement in place, of course — and now want to tie the knot. Graduate to a prenup. Many cohabitation agreements include variations of “what’s mine is mine, and yours is yours, except for XYZ”; prenups are usually a different enchilada, specifying financial arrangements for the marriage, such as who pays which bills or pockets tax credits, as well as specific outcomes in distinct scenarios, such as asset distribution after death.