## This & That: Couples Edition

P Wrote: Could you outline how a couple who are living together, but not married, can work out their shared finances? I had to sign a co-habitation agreement because he has a much better financial position than I do, although I have no debt and have savings/TFSA/RRSP.

What we struggle with is how to work out the expenses and savings as to what is his, what is mine and what is ours.

Gail Says:  Looking at how much you each bring home a month — the money that actually goes into the bank account — you should split the bills proportionate to your income.  So add your incomes together. Then divide YOUR income by this figure and multiply by 100. Ditto his income. So it would be like this:

If you make \$2,000 a month, and he makes \$4000 a month, when you add your incomes together you get \$2,000 + \$4,000 = \$6000

Divide your income by that \$6000 and then multiply by 100 to get a percent: \$2000 ÷ 6000 x 100 = 33.33%

Do the same for his income: \$4000 ÷ 6000 x 100 = 66.66%

This means you’d split the bills related to your joint living expenses with you paying 33.34% and him paying 66.66%. So if you have a mortgage payment of \$1800 a month, you would pay:

\$1800 x 33.34 ÷ 100 = \$600

and he would pay:

\$1800 x 66.66 ÷ 100 = \$1200

This, of course, only applies to the bills you agree to split, typically things like shelter, food, utilities and the like. You each need to take care of your own debt and savings.  The same goes for individual expenses. If he chooses to drive a fancy car that costs \$600 a month, and you choose a car that costs \$200 a month, you should each pay your own car costs. You’ll have to talk about — and negotiate — things like joint vacations.

K Wrote: My fiancé & I are working on a prenuptial agreement. We are both 60 and this is a second marriage for both. I rent an apartment; she owns her home free & clear. I am prepared to waive all interest in the matrimonial home and any future increase in value of the matrimonial home. It is her home and I do not feel I should have a claim on this significant asset. Our difficulty is how to divide up paying the monthly costs (heat, hydro, water, insurance, taxes, etc.) after we are married. Our retirement incomes will be about the same and we considered a 50 – 50 share. My problem is the cost of operating the home is much higher than the cost associated with my apartment. I choose an apartment because the cost was lower than owning and it is what I can afford. If I wanted the expense of home ownership, I would have bought a home. I am having difficulty feeling I should pay 50% of the costs of an asset I have no interest in. I don’t expect to live for free in the home and am fully prepared to pay my fair share. I suggested I would pay 30% of my income to her to represent my contribution towards my living costs (use of the home, heat, hydro, etc.). Since my income will be fixed with little change over the years, she will have to assume a greater percentage of these costs as time goes by. I feel she would face this problem if she remained single and this is the cost of her owning her home. She is not totally comfortable with this approach. Do you have any suggestions as to an approach we could use that keeps both of us happy and is fair to both parties?

Gail Says:  The points you make are completely valid. Since you will have no interest in the appreciation of the home, you should not be contributing to the ongoing maintenance or taxes. Your suggestion of 30% of your income seems fair and reasonable to me, or the equivalent of the rent you were paying before you decided to merge your lives. I expect she sees the “improvement” in your living circumstances as something you should be willing to pay for. If that is why you are marrying, you should. But I expect not. Negotiating the merger of two households is always a testy arena, which is why so many people dive in without a discussion of any kind. I applaud you for your willingness to take the bull by the horns.

F Wrote: I’m involved in a relationship with children.  I don’t work, I am currently in school. My boyfriend works full-time yet he refuses to help with any bills, we’ve been living together for almost 6 years and the only income I get is my child tax which is \$2089.00 a month, and I have to pay the rent, the utilities, food, transportation…everything you could possibly think of.  Every time I tell him we need to go half on everything he will give me money but ask for it right back.  I watch your show everyday and I get him to watch it to learn from it, but still nothing.  I do budget my money and I always do have jars but it gets harder and harder with 5 children and 2 in diapers. I’m not sure how to cover all the bills and still have money at the end of the month; do you have any advice or pointers for me?

Gail Says:  Could it be that you’ve hooked up with a Money Moron? If he is unwilling to contribute while working full time, maybe it’s time for you to wake up and smell the coffee. Are any of these children his? And is he contributing to their upkeep? If not, maybe it’s time you realized you are already on your own and now you must face your reality.

K Wrote: Have your books and they are wonderful advice. I am going to give both my boys your books for their birthday. How can I get my husband involved in the daily up keep of our finances? We have been married for 26 years. In that time I think my husband has looked after our banking once. I have tried almost everything that you have said in your books. Without my partner being on board, it is useless. Now I get so frustrated that I just let things go by the way side until we are under the gun. We are not broke, but we aren’t okay either.  Is there a way that I can get my husband on board with out making it look like I am a nag.

Gail Says:  This is clearly important to you so it should be at least a little important to him. Perhaps you are trying to do too much at once. Frustrated with him not paying any attention to the money, you may attempt to cover too much territory at one time. Try picking one thing you want him to pay attention to and addressing only that. “Sweetheart, I think we’re spending too much on eating out. If I’m prepared to limit myself to just \$_______ a week, would you also agree that’s enough? Can we do it in cash so we aren’t tempted to dip into the bank account beyond what we’ve agreed?” Over time you can cover lots of territory, but you may need to take it one very small step at a time. “Honey, we need to find a way to increase the payments on our credit cards so we get them gone for good. I’m going to do my damnedest to cut back on the grocery spending by \$60 a month to come up with the money. Would you be willing to trim back our cable/cell phone package for the next few months?” Or “I’ve heard if we raise the deductibles on our car insurance we could end up saving a goodly sum of money. Would you call the insurance guy and see just how much we could save if we doubled our deductible?”

K Wrote: I was reading your blog about wills and have a question. My husband and I currently do not have a will and my husband occasionally brings up how much we need one. I disagree. Our assets at the current moment is our house, our TFSA accounts which has the other spouse as beneficially, some cash in our bank (less then \$10,000) and two life insurance policy’s. (Mine is for \$350,000, with my husband as sole beneficiary, with step-kids and grand-kids as beneficiary if my husband and I were to die together. He has \$250,000 divided 60% to me and 40% to his kids and our grand-kids equally (so each would get 10%) My husband is 23 years older then myself and his on heavy duty narcotics due to workplace injuries which are why he has less insurance then me. (His costs 4 times as much as mine and mine is \$100,000 more then his.) Therefore, the majority of the assets have already been spoken for in a way that I believe you said trump a will.  With us naming beneficiaries, and the house being in both of our names. I also know that Canadian law says that without a will the first \$675,000 goes to the spouse, so that would take care of the money in the bank. My question is in this scenario why do we need a will? I should mention my family hates my husband and vice versa which I think is why my husband feels we need one, but I feel that we stated our intentions well in having beneficiaries named on all our major assets, so why go through the cost of a lawyer?

Gail Says:  You’re right in saying that you do not need probate property like your home that is held in joint names since joint ownership carries with it a right of survivorship. You also don’t need probate to transfer assets that have a named beneficiary including your TFSAs (along with  RRSPs, RRIFs, life insurance policies, pensions). When the owner of the asset passes away, you only need to provide a Death Certificate and some information in order to transfer that asset to the person who is named. Because of these rules, you can set up your financial affairs using joint property and beneficiary designations so that when one of them dies, the other one does not need to go through probate, as you have done. So, no need for a will. But what about personal possessions: things like furniture, cars, jewelry, and the myriad other things that aren’t held jointly; those can start a squabble. And what if both of you die together or in quick succession?  Then who gets the money? The few hundred dollars it takes to make a will is money well spent if it later avoids misunderstandings.

C Wrote: Co-habitation agreements. Are they worth it? Will they stand up in court?

I bought a house with my own settlement money (\$87 000) but moved into it with my common law spouse. He did not contribute to the payments. I keep all mortgage accounts separate and we only have one joint account for expenses like food. He pays me \$800 for “rent and expenses”. We’ve been together now for 5 years.

Would he be entitled to half my house if we split?

Gail Says:  Married people have rights under the law that common-law couples do not (except now in B.C.). The matrimonial home, for example, is the place where two married people live together. It doesn’t really matter who put what into the home, or whose name is on title, as long as you’ve lived in the house together and you’re married, it’s considered a joint asset.  Not so for common law couples.  If you don’t officially tie the knot, property rights cannot be assumed. In fact, property that you bring into the relationship continues to belong to you alone, so the end of the relationship does not automatically mean a 50/50 split.

Partners who have contributed to the upkeep of a home — if they’ve had a hand financially in improving the property or if they’ve made payments against the mortgage — can try to get that money back by going to court. But it’ll take a trial to settle any dispute that can’t be handled amicably and the claimant would need to have loads of evidence of their contribution: receipts, cancelled cheques, bank statements showing auto debits to pay the mortgage, and the like.

Cohabitation agreements are a better idea than leaving yourself exposed. A cohabitation agreement can describe what you’ll contribute and how your assets will be divided in the event the relationship doesn’t cross the finish line. Cohab agreements are particularly important where there’s a significant difference in what each person is bringing into the relationship and/or will be earning during the relationship. For the cohab agreement to have any teeth you need to both enter into it willingly and with separate legal counsel.  You’d be wise to identify which property you want to have treated as separate property, and how joint property will be split? Will it be 50/50, 60/40, or some other ratio that seems fair to both? Make sure you also identify which debts will be shared. Better yet, share no credit (except for the mortgage) and keep this aspect of your money completely separate.

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I’m hosting a special edition of The Current on CBC radio dealing with money and we’re looking for peeps who would like to share their stories.

1. Are you in a relationship with a money moron? Have you LEFT a money moron because could you just couldn’t take it any more?
2. Are you carrying a crap load of debt and wondering how you’re going to get out? Feeling disheartened and not sure what to do next?
3. Have questions you’d like to ask me about money and how to take control of it? For best chance of success, have a specific question in mind and don’t ramble too much.

Submit your story or question to pacinthe.mattar@cbc.ca . See you on the radio!

### 10 Responses to “This & That: Couples Edition”

1. I don’t believe “F” is living with a money moron. She’s living with a freeloader. Call a spade a spade.

2. F has allowed her boyfriend to sponge off her for six years and she is paying bills with her child tax credit rather than have the father(s) pay to support these children. If she has two in diapers it appears that the boyfriend would be their father. Who’s the real moron here?

3. K is getting married and doesn’t want to pay that much to live in house he says he doesn’t own. C is getting married and is being told that the married partner is entitled to house by matrimonial laws. So confused as to why K gets a pass and C is entitled.

4. As far as K goes, I don’t think you can relinquish your rights to the matrimonial home after marriage, can you? I think he needs legal advice about that.

5. Lily, NO where does it say that C is getting married. C is wondering if a co-habitation agreement will protect her if they spilt.

Totally different situations in the legal sense.

6. Read Gail’s answer to C. The first paragraph in particular. Even with a good prenup or cohabitation agreement a good lawyer will still find a way around it.

7. hi Gail, regarding couples sharing finances (first paragraph), shouldn’t the calculation be done with income after the mandatory payments are made? By this I mean debt repayment, support to older parents, etc. Also do you think couple finances would be easier to hamdle if there were a his. hers and couple accounts? The couple account will cover household expenses and family life, savings. The inividual accounts would allow for some individual freedom, so no one feels too controlled. For example I could donate to a cause my husband isn’t into, or take html5 classes while he pays for assistance with his software project. If this is done from individual accounts, we would have a small, healthy space between us, as Khalil Gebran would say! I drafted an excel program to help allocate money in such 3 accounts, and I would love your input on it.

8. I think tht setting up the “how” the money handled -joint accounts or separate – is less important than the “contribution”. I am not a fan of joint accounts – once bitten and all that – but my finance and I each contribute our entire net income to our household finances and then work off a combined budget. Some payments come from his account, some from mine and we both still feel independant.

9. I am considering moving in with my boyfriend. I own my home with a mortgage solely in my name.

HE is bad with his money, has terrible credit and I have good credit that I worked hard to get.

I was self employed when I was married and learned afterwards that even though, the credit cards etc. were “joint”, they really weren’t and the credit rating was actually my ex-husbands.

So I started fresh with no credit , which is worse than bad credit.

I will have him sign a co -habitation agreement as I will be moving provinces. I will be keeping the mortgage and house solely in my name, and will be putting the down-payment on the house. Because of having no credit , to get my mortgage, I had to put down 35% as I also was not a first time home owner.

HE is more than willing to sign the agreement and I plan on a clause in the agreement that would state that, if the relationship dissolves, that if the property is sold, I will first get my down-payment back +5% a yr interest from the proceeds and then anything left over will be split 50/50.

When the relationship is all rosy, you always say I wont try and take the house etc., but when it dissolves it gets nasty. My question is, would there be a loop hole in the agreement as stated?

10. @Athena….i would consult a family lawyer…. The fee will be well worth it should things not work out….best of luck!