This week in the wiser you toolkit we talk about how you can protect yourself and your assets when you decide to enter into a partnership with your significant other. This partnership can come in different forms- cohabitating, domestic partnership, or marriage. The fact of the matter is that when your relationship reaches this level, you are merging your life and belongings with someone else’s so make sure that you set expectations and form agreements for when things go south. Here is a useful toolkit to protect yourself if shit crashes and burns.
If you listened to episode 26, The Barber Shop there was a part of the conversation where Westley touched on prenups. It was an interesting conversation and the rest of the co-hosts learned a lot about what prenups cover and what they don’t. We wanted to expand on the topic of prenups but in the context on how to be prepared if things crash and burn. We will dive in a bit deeper into prenups and talk about other things you should put in place when your relationship is going well in the event that one day you both decide to split ways.
What should you think about if you are living together but are not married? We give you some areas to think about and decide if they are good solutions for your relationship. But first let’s look at some stats to understand how the numbers support you putting together a plan in case things crash and burn. Read More.
“A 2010 Census report put the unmarried-partner population at 7.7 million and 56.5 million for the married population.” If you are talking about moving in together, you should draft a cohabitation agreement before you move in together. Here are the things you should think about:
- Have an agreement in place that details how you plan to share assets, debts and any property we have now or may accrue in the event of a split
- If you are in a committed relationship consider a domestic partnership
Another type of agreement you can consider if you are cohabitating is a domestic partnership. “A domestic partnership is an interpersonal relationship between two individuals who live together and share a common domestic life but are not married (to each other or to anyone else).” The protections of a domestic partnership vary state to state, and city to city. 11 states that full recognize domestic partnerships are: California, Colorado, the District of Columbia, Hawaii, Maine, Maryland, New Jersey, Nevada, Oregon, Washington, and Wisconsin.
Lina D provides a more in depth summary of how the domestic partnership agreement works in New York City and highly encourage that both parties of the partnership look into the terms, benefits, and understand the differences vs. being in a marriage.
In NYC you have to register with the City Clerk’s Office and according to the office requirements are: Read more.
- Under city law, both partners must be New York City residents, or at least one half of the couple must be a city employee at the time of registration. Both partners must be a minimum of 18 years old and live together at the same residence. Neither partner may be legally married or registered in a domestic partnership with a third party. Acceptable identification for registration purposes include original birth certificates, driver’s licenses, passports, U.S. immigration cards or official education records.
- New York City employees receive the same availability of benefits whether legally married or registered in a domestic partnership. Among these rights are health benefits, child care and bereavement leave. Surviving domestic partners of New York City police or firefighters killed in the line of duty may continue to receive health insurance coverage.
- Visitation Rights
- Housing benefits
- What isn’t included:
- Domestic partners in New York City are not eligible for state income tax benefits permitted for spouses and cannot take out the equivalent of spousal insurance policies.
So what happens if you didn’t prepare for the split? Here are our list of suggestions on what you need to do.
- Make sure you can pay the monthly obligations(s) in its entirety in the case of a break-up before you take on legal responsibility to pay the above
- Have both names on all of the above to ensure you’re made whole down the line if your significant other moves out and doesn’t contribute his/her half while the dispute is being settled
- Sublet/AirBnb/Break Lease/Sell House/Get a Roommate
- Legal Action, small claims court or civil court
- Understand your options if you lose your health insurance
- Know how you split the high end assets
- Ideally, you and your ex can divide big-ticket household items amicably, based on who bought—or most uses—a particular item
- If both want an item and the item was purchased together then figure out a buyout price
- If you can’t, and he or she absconds with something valuable, consider legal action…small-claims court or civil court
- Talk about who gets to keep each pet
Lastly, Westley talks about the definition of marriage and the different types of divorce. Marriage is not only a romantic relationship, but also a business relationship. This dual nature and purpose of marriage has led to the increased acknowledgment that a prenuptial agreement (also called a premarital agreement or prenup, for short) can be useful to protect each spouse’s financial interests.
These are the pros of a prenup:
- A premarital agreement can protect the inheritance rights of children and grandchildren from a previous marriage.If you have your own business or professional practice, a premarital agreement can protect that interest so that the business or practice is not divided and subject to the control or involvement of your former spouse upon divorce.
- If you plan to give up a lucrative career after the marriage, a premarital agreement can ensure that you will be compensated for that sacrifice if the marriage does not last.
- A premarital agreement can limit the amount of spousal support that one spouse will have to pay the other upon divorce.
These are the cons of a prenup:
- The agreement may require you to give up your right to inherit from your spouse’s estate when he or she dies. Under the law, you are entitled to a portion of the estate even if your spouse does not include such a provision in his or her will.
- If you contribute to the continuing success and growth of your spouse’s business or professional practice by entertaining clients or taking care of the home, you may not be entitled to claim a share of the increase in value if you agree otherwise in a premarital agreement. Under the laws of many states, this increase in value would be considered divisible marital property.
- A low- or non-wage-earning spouse may not be able to sustain the lifestyle to which he or she has become accustomed during the marriage if the agreement substantially limits the amount of spousal support to which that spouse is entitled.
What happens when you decide divorce is the best option? There are different types of divorce to think about:
- No-fault divorce does not assign the fault of the divorce on one spouse, and cites no grounds for divorce other than a breakdown of the marriage. Spouses filing a no-fault divorce usually complete the divorce in an uncontested manner.
- A collaborative divorce is similar to a mediated divorce, with one major difference. In a mediated divorce, the spouses hire one, unbiased mediator to solve the terms of the divorce. In a collaborative divorce, each spouse hires their own attorney to solve the terms of the divorce. The spouses usually meet with their lawyers privately to discuss the spouse’s wants and needs. Then, all four parties meet to negotiate the terms of the divorce. This process continues until an agreement is reached.
- In an uncontested divorce, the couple reaches an agreement to settle the divorce issues, such as marital property division, alimony, child custody, and child support. Because the couple has collaborated on their divorce settlement, they do not need divorce lawyers or a divorce court hearing.
- Alimony – A grant of spousal support depends on the facts of the case, such as the disparity between the income of the parties, the duration of the marriage, the health of the parties, and the presence of very young children. In New York, spousal support is rarely granted on a permanent basis, except in cases of physical or mental disability or when the parties are elderly (about 60 years old or older). Generally, it is granted for a set period of time so the other party can get back on their feet after the termination of the marriage. The length of time depends on the facts of the case as the judge sees fit to award.