Divorce is notoriously expensive (both financially and emotionally), but as more unmarried couples move in together, they may be surprised to discover the costs of breaking up an unmarried household. For instance, "someone has to pay for a mover and cough up the security deposit because you're not necessarily going to get it back from the original apartment if the other person is staying," says Wynne Whitman, attorney at the law firm Schenck, Price, Smith & King and co-author of "Shacking Up: The Smart Girl's Guide to Living in Sin Without Getting Burned." "There are a lot of expenses involved in setting up an apartment."
Signing a cohabitation agreement
It's a good idea to discuss expectations before moving in together, even though it may sound unromantic. "Take the time to have the uncomfortable conversation about what you anticipate happening if you break up," says Whitman. "Everyone feels better if you've taken the question mark out of the equation." In fact, she suggests signing a cohabitation agreement (like a prenup for the unmarried) outlining who's bringing what to the relationship, how expenses will be divvied up, and what will happen in the event of a break up. Those who have lots of assets should consult a lawyer, adds Whitman.
Protecting against the unexpected
Cohabitation agreements are useful in case something tragic happens to one person. A woman referenced in Whitman's book had been living with a Wall Street tycoon when he died in 9, 11 and his family started taking belongings from their apartment. "How are the families going to know what belongs to each person? What were your intentions?" asks Whitman. Cohabitating couples may also want to consider healthcare proxy forms so that one person can make medical decisions for the other person if necessary (just be sure to update those forms later if you break up).
Deciding who stays and who goes
The biggest decision cohabitating exes face is determining who keeps the house or apartment. In cases where one person owns the property, the decision is usually clear-cut. In more ambiguous cases, Whitman suggests considering "Who could afford the rent? Who has the ability to move someplace else? Can one person move in with family nearby?" Also think about how much time remains on the lease and whether you need to switch utility bills to the other person.
Dividing up belongings
Without a cohabitation agreement or at least good records of who brought what, things can get messy. "If you kept a good record of who brought what CDs or electronic equipment, it will be easy to separate that," explains Whitman. She urges couples who buy furniture or electronics jointly to keep receipts or other records you can reference later. "If you spent $1,000 on a sofa, one person could buy the other person out," she explains. Depending on the sofa's age, you might agree to a 50, 50 split or factor in wear and tear.
Whitman doesn't recommend that unmarried couples mingle financial assets, because that makes a potential break-up messier. If you have a household account or a kiddy account, "how is that going to be divided? Are there any funds left in that account?" she asks. Family cell phone plans add another layer of complication. And if one person has domestic partner benefits for medical or dental through the other person's employer, that person will need to enroll in COBRA to continue coverage or buy another insurance policy. In cases where one person has promised to cover all financial obligations for an unmarried partner, that person may need to pay palimony (the unmarried equivalent of alimony), but Whitman says this is extremely rare.