Dear Rick:
I’m in my mid 50s and single. I have never been married and I have no children. I have been dating someone for the last five years and we are thinking about moving in together. Because of a variety of issues we have no plans to get married. Currently, he rents an apartment and he will be moving in with me. My house is free and clear. My father, who doesn’t think it’s a good idea, said that I am taking a risk by letting him move into my house. My first question to you is what risk am I taking, and is there anything I can do to reduce the risk? You should know that we don’t plan to comingle our finances and we would split the household expenses.

Thank you.
Tracy

Dear Tracy:
The old adage of always listening to your father is applicable in this situation. Yes, you are taking a risk by letting him move into your home, but at the same time, there are ways to protect yourself.

The risk that you have is what happens if your relationship does not work out and you want him to move out of the house and he doesn’t want to? In addition, there may be issues as to whether he owns a portion of the house and the division of assets accumulated during the relationship. After all, you said that you are going to split household expenses; does that include home improvements? He may claim that since he is paying for certain home improvements he is building equity in the home. The result of a break-up could be a nasty lawsuit which can get very expensive. Therefore, what I would recommend is that you consider entering into an agreement known as a co-habitation agreement which will protect both of you.

Over the last couple decades we have seen an explosion in the number of adults moving in together and starting relationships without being married. Despite the fact that more and more people are living together, the law hasn’t necessarily caught up with that trend. There are laws that protect couples when they are married, however, the law is unclear when it comes to people living together, and as a result there’s been a substantial increase in the number of lawsuits. Therefore, a co-habitation agreement is a way to resolve these issues before the parties begin living together.

A co-habitation agreement is nothing more than a contract between two parties who want to live together that define their rights and obligations to each other. Co-habitation agreements can deal with such things as property accumulated during the relationship, property acquired by gift or inheritance, property from before the relationship, expenses, separation or death, and dispute resolution.

I understand that asking someone to execute a co-habitation agreement, just like a prenuptial agreement, is not the most romantic thing to do. However, by entering into a co-habitation agreement and going through the process, it will tell you a lot about your partner, the maturity of your relationship, and about yourself. After all, if you cannot agree to terms on a co-habitation agreement, what happens to the relationship when you have a dispute?

When it comes to legal documents such as a co-habitation agreement, I always recommend they be drafted by a qualified attorney. When parties without legal knowledge try to draft their own agreements, they all too often fail to dot the I’s and cross the T’s; thus, the agreement may not be enforceable and if there is a dispute the parties will end up in court, exactly where they didn’t want to be. Furthermore, I recommend that each of the parties have their own attorney. If there’s only one attorney involved it may lead to allegations of conflict of interest or something of that nature. Therefore, it is good business for each of the parties to have their own attorney.

Particularly, for adults who are entering a relationship later in life, a co-habitation agreement is essential. After all, there are more assets and other considerations that can make a breakup more difficult and expensive. As adults, we have adult responsibilities and one of those responsibilities it to protect ourselves. Therefore, by executing a co-habitation agreement which deals with the various issues involved, it can protect both parties if the relationship does not work.

I know that a co-habitation agreement is a difficult issue to discuss. However, when we enter into a relationship as adults, we are going to have to be able to discuss difficult issues with each other. If you cannot discuss these issues now before you move in together, maybe it’s a sign that your relationship is moving too fast.

Good luck!

If you would like Rick to respond to your questions, please email Rick at rick@bloomassetmanagement.com