Moving in together (cohabitation)

What to do before you make two residences one.

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Tips and to-dos from money guru Jean Chatzky

Moving in together before marriage—or not tying the knot at all—is more common now than ever. Paying one rent instead of two can result in major savings. But without the legal protection of a marriage license, couples should proceed cautiously. Here's a list of topics to go over before you trade two residences for one:


Look into your crystal ball:

Why cohabitation? Is this a means to an end (marriage)? A means to no end (no interest in marriage, but envision being together forever)? Or is this short-term? Your answer affects how you'll proceed with cohabitation, domestic partnership, estate planning, and medical surrogate documents. A sudden death or disability of one partner could jeopardize ownership of shared property, other assets, and decision-making power.

Look in the rear-view mirror, too:

If you're divorced and receiving alimony, then moving in with a new partner could affect, and possibly terminate, your maintenance payments. It'll depend on how your payments are framed (some maintenance may be guaranteed, for example), so if you're unsure, consult your divorce lawyer.

Consider a cohabitation agreement:

Marriage is a legal arrangement with legal protections. Living together isn't, and it's important to think about what happens if cupid missed the mark—particularly if you're thinking about merging finances, jointly signing a lease, or buying a house, a car, or even furniture together. You can download cohabitation agreement templates at sites like LegalZoom.com or LawDepot.com.

Discuss the big three:

What you earn, what you own, and what you owe. Couples (and not just married ones) fight more about money than anything else. That's why it's important that both of you are transparent about what you earn and how much you can afford to split for rent and other living expenses. If one partner makes significantly more than the other, then splitting expenses based on a percentage of respective incomes might be fairer than splitting the same dollar amounts.

Create a monthly budget:

How much will it cost to live your life together? Where will the money to pay those bills come from? Who is paying for what? And who does the actual paying of those bills? If you hit a roadblock here—or anywhere on this list—calling in a financial advisor to work with you, as an impartial third party, is a good idea.

Consider autonomy:

Will you merge all your income in a single account, maintain separate accounts, or use a yours-mine-and-ours system? For all three it's important to know if you live in a community property state or a separate property state. In the former—even if you don't merge your money—some assets are considered merged (or blended) if you comingle money in any way. If you merge, then it's important to understand how your money will be divided in the event of a split. If you're considering the yours-mine-and-ours system, then how much money will be separate versus joint? (One way to do this is to each contribute an equal percentage of earnings to the ours account so that the total satisfies the household expenses.)

Childproof your agreement:

If either partner is bringing children in from a past relationship, then a cohabitation agreement should address those children and their needs. It should identify who gets to live in the home, and—in the event of a break-up—the consideration of the children's school schedules when moving out. If you and your partner plan on having children without being married, then a custody and support agreement becomes necessary. A family lawyer can help.

Protect yourself:

Whether you're renting or buying a place to live, make sure your name is on the lease or deed. Don't, and you could be homeless and out-of-pocket if the lease outlasts the love. Your cohabitation agreement should cover details in the event of a split. Approach credit cards with equal caution. There's a difference between a joint card, where you both have the same access to—and responsibility for—the account, and the scenario where one person holds the account and the other is an authorized user. In the latter case, the account holder is legally responsible for all debt; the authorized user for none.

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Views expressed are as of the date indicated and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author, as applicable, and not necessarily those of Fidelity Investments.
Jean Chatzky is not employed by Fidelity but may receive compensation from Fidelity for her services.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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