LETTERS From CAMP Rehoboth |
CAMPMoney: Couples, Consider Living-Together Documents |
by Alex Yearley |
The first key document is a non-marital agreement, commonly called a "living together" or "domestic partner" agreement. This document is similar to the prenuptial agreement that a couple with accumulated assets might sign before they marry. The agreement can be as specific or as broad as you wish to make it. Typically, the agreement will spell out how assets and income will be divvied up during a relationship or after a relationship, should it end. It might spell out what portion each will contribute to the monthly bills. Will paychecks be pooled or kept separate? What about assets inherited by one person during the relationship? Will they share employee benefits if one employer allows it? Will ownership of property bought during the relationship be based on who actually buys the property, or kept proportional to the individual investment made, or split down the middle? How will existing or future debts be handled, should they continue to be separate or made joint? How will property be divided at separation or death? A living-together agreement is especially important when the purchase of real property is involved. How will the house be titled? Who pays for what portion of the down payment and monthly mortgage? How will any gains from the sale of the house be split? The agreement also might spell out a method for resolving future financial disagreements, such as using third-party mediation before resorting to the courts. While there is little in the way of state statutes, most courts recognize living-together agreements. But interpretations vary, so you will want to hire an attorney (or perhaps each hire one) to draft the agreement based on your specific needs and local court rulings. The living-together agreement is only the start. Unmarried couples should also have wills, living wills, and powers of attorney. A power of attorney allows the partner to step in financially should the other become incapacitated. You can rescind such a power as long as you are mentally competent: so do not feel uncomfortable about signing one. A living will spells out what life sustaining medical treatments you might wish to have or wish to avoid if you become incapacitated. The medical power of attorney grants your partner or other appointed agent the legal authority to implement the instructions stated in the living will and to make other medical decisions on your behalf. While married couples need the same documents, they are especially important for the unmarried couple. Without them, parties will look to relatives to make these decisions not your partner. Written agreements not only can minimize feuds, they can promote a healthier relationship by focusing attention on financial issues central to all relationships. This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Alexander G. Yearley, CFP, a local member in good standing of the FPA. Mr. Yearley runs Community Pride Financial Advisors at 39 Baltimore Ave. Rehoboth Beach DE 19971 and offers securities through Cambridge Investment Research, Inc. Member NASD & SIPC. |
LETTERS From CAMP Rehoboth, Vol. 13, No. 4, May 2, 2003 |