U.S. Census data shows that between 2000 and 2009, the number of unmarried couples rose to 6.7 million (a 74 percent increase). I’m the better half of one of them.
It’s not something I like to think about, but sometimes I just can’t help it: What would happen if we broke up? Who gets the flatscreen we went halfsies on? The collection of dishes our parents have been contributing to for years? The dog?! (We all know who gets the cat, thank you very much).
Luckily, I’m not worried about our situation, but there are plenty of other couples who are forced to address these very questions every day. It happens — not every relationship is built to last, despite both parties’ honest intentions otherwise, and a breakup is sometimes inevitable. However, while money is a common reason for relationship problems that can lead to a breakup in the first place, it’s also the actual breakup that can threaten your financial well-being.
Dealing with a Break Up Financially
Breakups can go down a number of ways, but they’re usually never too pretty. In fact, breaking up when you’re not married can be messier than a real divorce, legally speaking. According to STLToday.com, a 2011 survey by the American Academy of Matrimonial Lawyers found close to half of the divorce lawyers who responded had seen an increase in court battles between couples who used to live together.
That’s why it helps to have a “cohabitation agreement” set up ahead of time (i.e., when you move in together), which ensures all are less inclined to vengefully empty the joint bank account or walk out the door with their partner’s entire DVD collection. It’s not as weird or uncommon as it sounds — in the same survey above, 39 percent of the respondents also saw an increase in cohabitation agreements over the previous five years.
According to the Guardian, a cohabitation agreement is designed to recognize what each person brought into the relationship, and how those things would be split in a breakup. “It’s a lot easier to set these things out at the beginning, rather than try to remember what happened years later,” Tony Roe, a family lawyer, tells the site.
Having a cohabitation agreement in place will help you both figure out how to divide possessions after a breakup — if there ever is one, of course.
How To Divide Possessions After a Breakup
Bank Accounts and Credit Cards
It’s never advisable to share joint accounts or add a significant other as authorized user on your credit cards unless you’re married. Alas, it does happen.
However, there are concerns that go beyond potential post-breakup spending. As Denis G. Kelly, President of IDCuffs.com, says, “Breaking up is hard to do, but recovering your identity is even more difficult.”
In order to prevent an ex from attempting identity theft, Kelly recommends you inventory every account in your name, making certain “only the appropriate party is on the account and is the only authorized user.” Additionally, he advises placing a fraud alert on your credit file to catch any questionable activity. Too extreme? Depends on who you’re dumping.
Whether you’re renting or you pay a mortgage, splitting up the living arrangement can be very tricky. The key, again, is to set plans in place when things are going well so there isn’t a battle over the house if things should go south. Michael Corbett, Trulia’s real estate expert, tells Fox Business, “You have to create an exit plan and not go into it blindly without an agreement.”
When renting, it’s important to have both people’s names on the lease, so that they’re equally financially responsible for the property. If you purchase a house together, however, it’s advisable to have a buy-out option in place for the person who can most easily afford it.
Figuring out how to split up a houseful of furniture, electronics and appliances collected over years as a couple. A good general rule of thumb is that if you brought something into the relationship, you keep it. As for joint purchases, the best advice anyone can give is to be an adult about it, and be fair. If you can’t decide who gets the couch, TV, etc., your best best is to sell it all and split the cash.
Remember, no one “wins” by getting their way or walking out with the most stuff — there’s no winner in this situation.
Breaking up is indeed, hard to do, if only for the potential financial mess it causes. However, as unromantic as it sounds, you have to go into a serious relationship as if it’s a business agreement. After all, if you’re mature enough to live with your significant other, you should also have the maturity to talk about important financial matters upon moving in. Relationships can last months or years, but big financial mistakes can haunt you for decades.
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