Nearly everyone dislikes the idea of creating a legal agreement to govern his or her relationship. It seems to take the spontaneity and trust out of the relationship and reduce it to a business arrangement. However, in some cases it may be the right thing to do.
First, let’s look at the difference between the two agreements. Premarital agreements are created between two individuals who are planning to get married in the near future. Living together agreements, also called property agreements, are created between two individuals who do not plan to marry immediately, but who may accumulate property together. This can include same-sex couples and long-term roommate situations, as well as couples who choose to live together for an extended period.
Generally, a premarital agreement is a good idea when one or both parties bring property into the marriage, one makes a larger income, or one or both owns a business. It becomes a necessity if children are involved. The agreement will indicate the property owned by each individual before marriage and how property purchased after marriage will be owned, managed, or controlled. It may also cover such issues as how jointly incurred bills will be paid.
If one spouse has children or grandchildren, that person may indicate through the agreement (and a will) to leave the bulk of their estate to their heirs at the time of death rather than leaving it to the surviving spouse. The agreement will also cover the details of any settlement or alimony should the marriage end in separation or divorce.
The Uniform Pre-Marital Agreement Act is a federal law that provides legal guidelines for premarital agreements. Agreements are usually enforceable in court unless it can be proven that one party was forced to sign the agreement against their will or that the agreement is written in such a way as to promote divorce, such as providing an unusually large settlement.
Living together agreements also indicate the property that each party brings into the relationship. They spell out how property jointly acquired during the relationship will be owned and what will happen to the property should the couple separate. The agreement may also indicate how money will be handled (does each person handle their own; will they have a joint account; or some other arrangement). If the couple later decides to marry, the living together agreement will no longer be valid and should be replaced by a premarital agreement.
Non-financial issues, such as who does the cooking and who does the laundry, are not covered by either a premarital agreement or a living together agreement. An attorney should prepare either agreement, since the simplest of mistakes can make the entire agreement void.
Though you may not like the idea of signing a premarital or living together agreement, having one could protect you and your assets if your relationship should end.