Conversations about money and living together may be difficult. However NOT talking about money can lead to greater difficulties in the future. 
November 2014  Issue #45

Today's Topic:  Finances, living together & legal agreements

Dear friends,

I used to read about celebrities and their pre-nuptial agreements with some skepticism.  How unromantic I thought!  Weren’t they just planning for divorce?
My thoughts on the topic have shifted as I hear the financial concerns of mid-life and older singles who contemplate re-marriage or living together.  They love their partners AND they may worry about safe-guarding their hard-earned assets.  This prompted me to do a little research on the topic of living together, finances and legal agreements.  Read on to learn more.

All my best in making wise financial choices,
Something to think about

A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.
                                                                      --Suze Orman

Why it’s important to talk money
Many of my single clients, who are mid-life or older, are concerned about the financial ramifications of living together or marrying again.  If they have planned well, they have accumulated assets over the course of their working lives and are on-track for retirement or financial independence.
So it’s understandable that they have money concerns. Some have been married before and have seen their assets halved at the time of a divorce.  Some have experienced the loss of a partner and want to ensure that their assets go to their children.  Others have built their assets all on their own and feel vulnerable entering a relationship with someone whose assets or income are considerably less.
So their questions arise:  How do I deal with my financial concerns? What financial responsibilities does a relationship entail at this stage of my life? Should I get a marriage (pre-nuptial) or a co-habitation agreement?
Things to consider
Whether in your twenties or your sixties, it is always wise to discuss finances prior to living together. While conversations about money may be difficult, NOT talking about money can lead to even greater difficulties in the future. 
Any couple planning to marry or live together might consider the following questions:
  • Will we combine our incomes or keep them (wholly or partially) separate?
  • How much debt are we bringing into the relationship?  What type? (spousal support, credit card, child support, education loans, etc.)
  • What is each person’s credit standing?
  • How much to save/invest versus spend?
  • What % do we want to donate?
  • Who will pay which bills?
  • How do we make decisions about major purchases?  (my car, your car, travel, etc.)
  • If applicable, should we pool and share my children/your children’s expenses?  Or handle them separately?
  • What about the assets we acquired before we met?  What if one of us owns an apartment or home?
There is no one-size-fits-all solution – every couple will need to consider their own values, circumstances and expectations in working out an arrangement that suits them. However, given how often financial issues contribute to break-ups, it is best to clear your expectations with one another in advance and know what you’re dealing with, going in.
Yours, mine or ours?
The older the couple is, the likelier they are to have assets that pre-date the relationship, as well as concerns regarding children and perhaps grandchildren.  Blended families face unique financial questions and arrangements. In these more complicated situations, it’s especially important to do your financial homework.
Not every couple will opt for a legal agreement. However it may be useful to consider. Doing so will flush up the important issues – and encourage full disclosure and transparency.
Location is a factor
Where you live, can make a difference in the need for a legal agreement.  Laws regarding married and common-law couples vary within each province of Canada and each state in the US.  Many countries are biased in favour of legal marriage and fail to provide consistent protection in the case of living together. 
Know what the laws are -- and how they will affect you in the event of a break-up or a death.  Then you can decide if you want a legal agreement to protect yourselves or if you need to adjust your wills.
What exactly is a Marriage or Co-Habitation agreement?
According to the Canadian Bar Association website, a cohabitation or marriage agreement is a legal contract that summarizes each person’s legal obligations to the other.  “They set out a series of promises that you each make to the other, usually about what will happen in the event the relationship ends, but sometimes also about what will happen during the relationship.” 

Please note that the CBA also points out: Court enforcement of a legal agreement (should one partner try to ignore the agreement) will depend upon the agreement being reasonably fair and on both spouses having received independent legal advice before signing it. 

 A local resource
I recently interviewed Lesley Midzain of Evergreen Law Corporation in North Vancouver to find out more.  Lesley focuses on Personal Legal Planning. Pre-nuptial and co-habitation agreements are among her many services.  I was surprised to learn that these agreements can cover how a couple will manage their finances while together, as well as in the event of a break-up.  With or without a formal agreement, this is important stuff to sort out before living together!
According to Lesley Midzain, an agreement can provide comfort around:
  • Handling expenses, including expenses for children in blended families or for elderly parents
  • Managing or sharing investment assets, such as rental properties
  • Dealing with inheritances
  • Establishing home equity and ownership
  • Determining responsibility for outstanding debts
  • Setting out each person’s expected roles and responsibilities in the relationship
A legal agreement, says Midzain, “doesn’t have to be viewed as ‘planning for the end’.” It can be a plan for the present that prevents future conflict and costly litigation. Midzain also recommends reviewing it regularly and updating it as needed, especially if there have been significant changes in the relationship, to make sure it continues to meet the couple’s intentions and expectations.

Be informed
Each individual and couple must determine for themselves whether they want to formalize their financial arrangements with a legal agreement. Find out what protections the laws where you live actually provide, rather than relying on hope or hearsay. Look at what your specific concerns are: whether it's protecting your assets or wanting recognition for the unpaid labour you contribute to the relationship. Talk it over with your partner to see if you’re in agreement.  Consult with a lawyer, if you have questions.  Then you’ll be in an informed position to decide whether or not a legal agreement is the way to go.
Invitation to action
If you are contemplating marriage or living together, I invite you to use the questions above to initiate some conversations with your partner, to clarify your individual financial situations and your expectations of each other. The topic of money can be quite triggering.  So be kind to yourselves in the process.  However, rest assured that clarity and transparency around finances is the best prevention of future conflict.

Shirley’s Update:
I have been learning about letting go. With the heavy rains in the Vancouver area earlier this month, the lower level of our home was flooded, including our home offices and crawl space.  In the ongoing clean-up process, my husband and I have been sifting through all the boxes and keepsakes that were compromised by the water. It's been an exercise in savouring those tokens of times past -- one last time -- and then letting them go.  Ironically, decluttering my office has been on my to-do list for the past 6 months plus. This isn't the way I planned it, however I will celebrate the result!
Shirley Vollett BSW PCC is a Life and Relationship Coach, with over 25 years of combined experience in counselling and coaching. She delights in helping pro-active individuals make positive changes in their lives, their work/business and their relationships. Her clients appreciate her ability to listen deeply, her compassionate wisdom and her support in staying focused. Contact Shirley for a complimentary intro phone session. If you are experiencing a challenge or are eager to make some changes, explore how coaching works and how she can help. Click on a link below or visit her website.
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