You and your partner may have spent a significant number of years together before the romance finally ended.
However, if you never formalized the relationship, you may be in for a big surprise if you expect that you can go your separate ways without a struggle over the division of your property and assets.
Think contracts, not cohabitation
Essentially, while you weren't married to your partner, you may still have entered into a number of contracts with him or her over the years. That's what the court is really looking for -- and likely to enforce.
If you're thinking that only written contracts are important -- think again. Oral contracts can be just as important and binding, and they're often proven by the actions of the parties after the contracts are made -- which can make them hard to deny later.
For example, imagine that your and your partner bought a lakefront cottage -- you bought the property but your partner made the yearly tax payments for the last 10 years because you were supposed to turn over half the title at the end of those 10 years. While it would have been smarter for your partner to get the agreement in writing, the fact that he or she paid the taxes on a property that was solely in your name for all those years lends credence to his or her allegations of an oral contract between you.
Think ahead, not after
The best way to avoid a painful and expensive lawsuit that could cost you almost as much as your assets are worth is to enter into a cohabitation property agreement if you and your partner plan to start acquiring anything more valuable than a few pieces of furniture together.
A good agreement will specifically address how ownership of individual items will be determined and how those items will be divided if you split up. It should also address a number of other issues:
- How income and savings accounts are divided and shared
- Who owns the right to what portion of any bank accounts, stocks or bonds
- How debts are to be divided if there any jointly held
- Ownership, occupancy and buyout rights of any real estate
Entering into an agreement after you've started cohabitation when your relationship is strong is a wise way to avoid property division disputes down the line if the relationship ever falters.
Source: FIndLaw, "Cohabitation Property Rights for Unmarried Couples," accessed Aug. 31, 2017