My tip to couples who live together before legal marriage is to realize they are truly partners – not just in the intimate or romantic sense of the word, but in the financial and legal sense as well.

Their decision to cohabitate has created a de facto economic partnership between them, and their next step is to make this partnership explicit by drawing up a written partnership agreement. This applies not just to young couples, but to older non-married couples as well.

Just like a partnership agreement for a business, this cohabitation agreement should spell out terms for each of the following financial questions:

  • How income and expenses are apportioned between the partners;
  • The ownership of all assets either contributed to or purchased by the partnership;
  • The conditions and terms for dissolution of the partnership or reorganization into another legal entity (such as marriage) or status (such as parenthood).

This proposal may not sound very romantic to couples who haven’t thought much further than the best sleep numbers for their new mattress, or whose Social Security check will be used just for fun. But once the hard work of drafting the agreement is over, it can go a long way toward preserving the romance that brought the two together, as well as mitigating the bitterness and hassles that can arise if the two decide to part.