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How to talk to your partner about a Cohabitation Agreement

Once a relationship moves to the more serious phase of moving in together, then the more mundane practicalities of partnering up become important. Legally you are now classed as a “de facto couple” and this carries certain rights and responsibilities.

The law now grants de facto couples rights comparable to those of married couples. This includes the right to apply to the Court within two years after the end of the de facto relationship in relation to issues such as the division of property and spousal maintenance.  The de facto relationship must have been for a period of at least two years in order to apply.

With these new laws in place it’s not just a simple matter of shacking up and moving on when the time comes.

Talk to partner about financial agreement
Honest communication about financial matters makes it easier to put a Financial Agreement in place.

Financial Agreements are a legal tool that you can use to clarify how assets and liabilities are owned, in what proportions and what should happen in the event that the relationship comes to an end at a later time.

This can alleviate misunderstandings and disputes that might later arise, and give couples a common understanding and foundation upon which to base their financial future.

Considering that money problems are the number one reason for relationship woes and breakups, it makes sense that a couple should learn to discuss finances – how they see themselves advancing financially and their goals and aspirations for the future.

Consider this scenario

Grant moves in to his girl-friend Amy’s home, which she owns.  Grant begins contributing $100 each week for the benefit of living in the home.  Amy wishes to retain 100% of her assets, and considers Grant’s payment of $100 each week to be for rent (not an entitlement to a share in the house), and Grant agrees.  They decide to formalise their agreement by signing a Financial Agreement, which they will both be bound to respect in the event the relationship breaks down, providing certainty to both parties.  They can review the Agreement at a later time if things change, but for now, they are both happy with this arrangement.

Financial Agreements are also being increasingly relied on by mature couples entering into their second significant relationship, to preserve assets for the benefit of their children.

Bringing up the subject of a Financial Agreement with your partner

Initiating a discussion about assets and finances is obviously going to be easier if your partner also has assets.  If this is the case, then it would be likely your partner would also want to reach a mutual agreement about how assets are to be managed – both those accumulated prior to the relationship, and those accrued during the course of the relationship.

For example, a couple can decide to effectively quarantine the assets accumulated separately before the relationship began, with the effect that if the relationship ever ended, each person would remain entitled to the assets they each brought to the relationship and those accumulated during the course of the relationship could be divided according to the proportion each invested.Cohabitation Agreement Template - Learn more

Obviously, initiating a discussion about financial issues will become a little more delicate if your partner has no assets (but you do).  Nevertheless, it is important to discuss your intentions openly and honestly.  Broach the subject in a gentle way – do not approach the issue from a defensive, combative approach.  You are both in a partnership together, and setting up the solid foundation on which you can base your future together.

Getting the timing right

When considering a Cohabitation or Pre-Nuptial Agreement (“Financial Agreement), you should take your time and plan ahead – avoid any temptation to surprise your partner by presenting him or her with a Financial Agreement that you have had drawn up without their knowledge, requesting they sign the dotted line without any prior discussion on the matter – or worse, on the day you are moving in together or getting married!  Eeek!  Not only is this a sure-fire way to send your dearly beloved running for the hills, it is also extremely insensitive.

In addition, such agreements if signed are likely to be invalid on the grounds of undue pressure and duress, as shown in one Australian case which involved a young lady being presented with a pre-nup and told that if she didn’t sign, the wedding was off!

The process takes time, from initial discussions to the point of signing, so getting started sooner rather than later is a good idea.

Discussions should start well in advance of the date you are planning on getting married or moving in together.  Both parties should have input into the Agreement and be completely satisfied with its terms.

That being said a Financial Agreement can also be put in place after marriage or cohabitation has commenced.

Pick your moment

Schedule an appointment – let your partner know that you want to discuss something important.

Choose a time when you are both feeling calm, free of external stress and able to focus on the discussion without any interruptions.

Start Simple – don’t overwhelm your partner or yourself.

Once you start the discussion, keep it simple and straightforward – remember not everything needs to be sorted in one sitting. Your first discussions might be broader or more philosophical – coming to an agreement about why the document is required. Once you have that meeting of the minds you can start fleshing out the details.

It’s better to have shorter regular meetings than long drawn out affairs where you risk conflict.

Have an answer to the question “why do we need a contract?”

Your partner may not know very much about financial agreements and may question why it is necessary. Have an answer prepared in advance, for example,

“This house is all I was left with after the divorce, I’d like to sit down and talk about how we will handle ownership and any future renovations and expenses” or

“I am thinking about how we will handle our joint finances when we move in together, we  seem to have different spending styles how are we going to work that out?”

Stay calm, fair and respectful – focus on the goal

Remember you’re in this together, talking about finances can be stressful but you can navigate the process by being calm, fair and respectful.

More resources:

Tips on Effective Communication

Financial Agreement Kits