Moving in together – smartly
You and your partner have combined your furniture, broken the news to the family and friends and had serious negotiations about who will clean the toilet and who gets the bigger wardrobe.
But if you’re sharing an address without tying the knot – there are important legal and financial questions to consider, too.
Living together can have big consequences for your credit, your tax bill, your legal rights and your superannuation.
Documents such as wills, co-habitation agreements, powers of attorney and enduring guardianships can protect you individually and as a couple.
It’s easy to put this off when things are going well – and potentially devastating when things aren’t.
GET IT ON PAPER
If you do nothing else, make a will. The last thing you want is a battle between your partner and your family.
SPELL IT OUT
A co-habitation agreement is a prenuptial agreement without the nuptials.
This agreement governs what happens if the relationship breaks up – and one national estimate showed that 40% of opposite-sex cohabitors break up within 5 years of moving in together. It also can help establish who owns what if one partner dies.
Spell out what property each person is bringing into the relationship and decide how those will be divided if the relationship ends.
Then decide how major joint purchases will be divided. If you buy a new couch together, will you see a mediator or flip a coin for it if you split? And who gets to keep the dog?
If you’re going to set up joint accounts, how will those be managed? No-one spends more than $200.00 on a joint credit card without the partner’s permission?
Finally, the agreement could state how major expenses will be handled. Will the rent or mortgage be split 50-50? Will the partner who makes more pay more?
Binding Financial Agreements can be entered into before, during or after a relationship has ended.
POWER OF ATTORNEY
A power of attorney allows your partner to manage your affairs if you are incapacitated. If you maintain a separate account, your partner won’t have access to it to pay your bills without this document.
An enduring power of attorney is still effective if you loose capacity through unsoundness of mind (think dementia or car accident).
An enduring guardianship allows you to designate who will make health-care decisions about you if you can’t. Without it, your partner doesn’t have a say. Your relatives may have the right to make decisions about your health care.
While you’re at it, you’d be wise to consider instructions about your wishes regarding life-prolonging measures. This makes clear your intentions and could avoid emotional battles between your partner and your family.
BUYING A HOUSE TOGETHER
If you want to own a house together, there are a couple of ways to take title. If you choose to be ‘joint tenants’, you each own the house in equal shares, and your half automatically passes to your partner if you die, even if you have no will.
‘Tenants in common’ allows you to own the house in unequal shares. Your portion belongs to you, and you specify in your will who gets your share.
You may need to consult a professional about tax ramifications if you opt for joint tenancy. Ditto if you own a home and want to add your partner to the title.
-annuation that is. Keep your beneficiary designation up to date. If you’ve listed a sibling or previous partner as your super-fund beneficiary, for example, he or she will receive that money on your death.
That’s true even if your will specifies that a different person will inherit your estate. Your will doesn’t automatically trump your beneficiary designations.
COUPLES WITH CHILDREN
You can use your will to designate a legal guardian for your children if you die. But the interests of the biological parent, in many cases, will take priority over the rights of the person you name as guardian.