If you plan to make your home with another person, you are in for surprises, both pleasant and not. You hope your relationship will endure and that the person you are sharing with is honest and responsible.
Whether you’re married, living together as lovers, or just friends, you hope that if you go your separate ways you’ll come out of the arrangement in as good an emotional and financial situation as you had when things were new. Whether or not you consider your new roommate to be a friend or lover, you should put your expectations in a signed writing before making a commitment.
Insisting on a contract before you combine your resources doesn’t mean you are questioning the other person’s honesty or intentions. It is just a good idea to understand each other while things are going well.
If the break-up is nasty, you’ll both be better off if you have agreed in advance how you will divide your debts and property. Utility bills, rental payments and credit card debts can often be the source of controversy when two people go their separate ways, and a judge is likely to do something that both of you dislike.
One person may have carried the heavier financial burden throughout the arrangement. When separation comes, people forget promises to pay back money that they made when things were going well.
If you agree in advance who will be responsible for what expenses, or proportions of expenses, throughout the relationship, the bills and obligations that remain after the arrangement ends will be less likely to cause a dispute.
If you make big item financial commitments together, it is even more important to prepare for the possible end of the relationship in advance. If you co-sign to buy a car or house, you will be responsible to pay the lender no matter what you and your partner have agreed.
If your partner leaves with a car and your name is on the debt, you could be called upon to pay all or part of the debt if the car is repossessed. If insurance lapses and your ex is in an accident, your former dream relationship can turn into a legal nightmare.
Likewise, your signature on a mortgage or lease is a promise to pay no matter how things work out between you and your partner. If she kicks you out, or he suddenly splits, the bank or landlord will have the right to pursue both of you for money.
(to be continued)