For Richer or Poorer: Don’t Let a Breakup Break the Bank

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Picture this: ambient candlelight, scattered rose petals, your significant other and…a prenuptial agreement. Okay, that last part may have killed the mood, but it’s definitely worth talking about with your partner.

Whether you’re already married, engaged or living together, the cost of breaking up can take more of a toll on your finances than you might think. The average cost of a contested divorce is $30,000, according to Women’s Health, and the cost of splitting with a live-in partner can be several thousand dollars. Nobody enters a relationship expecting it to fail, but there’s nothing wrong with protecting yourself; think of it as relationship insurance. A little planning as a couple can put you both at ease and ensure your break up doesn’t break the bank.

According to the Pew Research Center, 18 million adults cohabited in 2016, up 29 percent from 2007. Living together can be a cost-effective way to grow closer with your partner, but it also has its risks. If you’re cohabiting, consider preparing a document in writing that specifies what you will do with all of your joint assets if you decide to end the relationship. This doesn’t need to be an overly involved process (read: no lawyer necessary). Take care to parcel out everything you’ve purchased together, such as furniture, security deposits, utilities, pets, and come to a mutual decision about what your contingency plan will be, then be sure to sign both your names. If you sign a lease, you should also look carefully so you know what your options are if you break up. Some landlords will allow renters to break the lease by paying a fee; others will insist you finish the lease terms. Be sure to include a plan for either outcome in your cohabitation agreement. In the same vein, make sure both names are on the lease. Otherwise, your partner could skip town and leave you responsible for all of the rent.

If you didn’t draw up a cohabitation agreement, there are still some things you can do. First, it’s never too late to put one together. Frame the conversation as being more about protecting each other than trying to take from each other. It may seem stingy, but consider saving receipts and statements that prove you paid for certain items, as these might come in handy in the event of a dispute. Finally, try to maintain financial independence. There’s no need to rush into joint accounts simply because you’re living together.

While the divorce rate is declining–keep in mind the marriage rate is falling, too–it’s still 3.2 per 1,000 total population, according to the Centers for Disease Control and Prevention. If you’re getting married, don’t overlook the prenup! In the wise words of Kanye West, “It’s something that you need to have.” Jokes about gold diggers aside, even if you both enter the marriage with very few assets, your assets merge and accumulate in a marriage, and it can become very messy to navigate should you decide to divorce. Even your spouse’s student loan debt can be considered a joint debt by divorce courts. To create a prenuptial agreement, you’ll each need your own lawyer, and about $2,500, about half the cost of the average engagement ring. Definitely don’t skimp and opt for a DIY version, as judges will often throw these out.

If you’ve already said “I do,” don’t stress. Postnuptial agreements can be arranged after the marriage, although they are more difficult to enforce in court. The American Bar Association says that postnuptial agreements are often assumed as less valid because they were drawn up after the commitment to care for each other, financially and otherwise, was already made. But if there’s a reason to revisit how your assets are allocated, for example, if your spouse inherited property, it might still be worth talking about.

No matter the terms of your relationship, there are some things you can do individually to protect yourself as well. Maintain at least one credit card in your name only. This bolsters your individual credit and proves your ability to assume responsibility for your own debts, which will help you set up new accounts for yourself if your joint accounts close. It’s also a good idea to keep your own safety net—and don’t touch it! Save more than you think you’ll need; most experts recommend about six months’ worth of living expenses.

When you decide to stop guarding your heart, it’s smart to keep guarding your finances. Open communication and planning are key to ensuring both people are protected. It’s an awkward conversation to have, but you might be thanking yourself later. After all, no one ever said love wasn’t risky. ■

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