Living Together? Think Twice Before Combining Finances
In 1977, only one million Americans were cohabiting; today, it’s five million, according to the Census Bureau. Should you combine bank accounts with a live-in partner?The short answer is: No. Keep everything separate—from credit cards to savings accounts. My friendly neighborhood banker shared the tale of a client who opened a joint account with her boyfriend, only to have him drain it when they broke up.
When you’re married, the government recognizes your assets as legally owned by both of you. If someone absconds with all the cash, the other person has the power to get restoration in a divorce court. But if you’re not hitched and your partner walks away with the dough, you have no legal recourse, because when you opened your joint account you signed a customer access agreement that gave your partner the key.
Another risk: If your partner is a check bouncer, you’re both liable for his bad habits in the event he bounces out of the picture. If you are a long-term, live-in couple with no plans to marry (Susan Sarandon/Tim Robbins, Goldie Hawn/Kurt Russell), consider a written property agreement that notes who owns what, and how you split up income and expenses.
Why bother? Because many states recognize an oral contract, or one implied by a living arrangement. So if you’re an investment banker supporting an unpublished poet, theoretically, he or she could go before a judge and say that you promised to split your take-home pay 50/50 with him. Tough to prove, yes, but who wants a court fight? You can download forms for a written property agreement at the web site Selfhelplaw.com.
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