What to Include in a Living Together Contract

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basking in the glow of just having joined forces or you’ve been together
20 years, you should consider the legal consequences of how you live. If
you mix assets or share expenses, please do everyone a big favor and put
your agreement in writing, especially if significant money or property is
involved.
tip
If you have decided to marry, enter into a civil union, or register
as domestic partners, you may want to sign the equivalent of a prenuptial
agreement. By doing so, you can opt out of some of the rules of the marriage
or marriage-like relationship you are entering. Each state has very detailed rules
for prenuptial contracts, and making an agreement can be rather complicated.
You will need a lawyer’s help to draft an agreement, and in many states, each
of you will have to retain your own independent attorney, or the agreement
will be presumed to be invalid. Also, if you register or marry, chances are your
old agreements—even the written ones—will be superseded by the marriage
“contract,” unless you sign a new agreement that deals with any discrepancies
between the old agreement and the marital rules that now apply to you. Better
still, draft an entirely new one. Use Prenuptial Agreements: How to Write a Fair &
Lasting Contract, by Katherine E. Stoner and Shae Irving (Nolo).
What to Include in a Living Together Contract
A living together contract can be comprehensive, covering every aspect
of your relationship, or it can be specific, covering only your new house
purchase. (We provide sample contracts specifically for purchasing a
house together in Chapter 9.) These contracts need not be like the fineprint monsters foisted on you when you buy insurance or a car. You can,
and should, design your contract to say exactly what you both want, in
words you both understand. A simple, comprehensible, and functional
document using common English is much better than one loaded with
“heretofores” and “pursuants.” And it’s better to make a simple agreement
that covers the basics than to ponder endlessly over a complex one that
you never sign.
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If you want your living together contract to include the day-to-day
details of your relationship, write up two agreements. The first one should
be only about property and finances. Then, if one of you ever sues the
other in court, the property and finance terms should be the only ones a
judge ever sees. Write up a second agreement if you wish about who will
do the dishes, who will walk the dog, how many overnight guests you’ll
allow, and whose art goes in the living room. A court probably won’t—
and shouldn’t be asked to—enforce this kind of agreement. As a result, if
you do just one agreement that includes the personal as well as financial
clauses, a court might get distracted by the personal clauses, declare the
contract illegal or frivolous, and refuse to enforce the more important
financial clauses.
The following sections discuss some of the types of clauses you may
want in an agreement.
Property and Finances Clauses
Your living together agreement should cover all of your property—
including the property you had before you began the relationship and the
property either or both of you accumulate during it.
Property owned before living together. You probably each had some
property before you met. Just because you move in together doesn’t
mean you can’t continue to solely own your TV, oriental tapestry, and
floppy-eared cocker spaniel, while your lover holds onto his or her car
and collected works of Virginia Woolf. But just as with property you
want to own together, you should have a written agreement. Making an
agreement about the property you bring into the relationship may seem
unnecessary, but it’s not. Think about trying to separate it all ten years
from now, when you’ve both been referring to everything around the
house as “ours.”
You can deal with the use of valuable items as well as ownership. Who
gets to use the property? Who pays for upkeep? For instance, Alan owns
a boat that he’ll want to keep if he and Fred ever split up. Fred agrees
to help with upkeep in exchange for using it, without acquiring any
ownership interest.
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Property inherited or received by gift during the relationship. Many people
want to keep separate any property they inherit or receive by gift. Others
want to “donate” the property to the relationship. Again, it’s up to you. If
you plan to keep inherited or gift property separate, don’t forget to cover
questions of use and control. Remember, though, any property given to
both of you is legally owned by both—this includes gifts you receive at
your wedding, commitment ceremony, or anniversary party, even if the
gift is given by a relative or friend of just one of you.
Property bought during the relationship. Many people make purchases
item by item, understanding that whoever makes the purchase owns the
property. George buys the kitchen table and chairs, and Ham buys the
lamp and stereo. If they split up, each keeps the property he bought.
Purchases also can be pooled. Ham and George can jointly own
everything bought during the relationship, and divide it all 50-50 if they
separate. A consistent approach to property ownership may simplify
things, but is required by neither law nor logic. Ham and George could
choose a combination of the two methods. Some items may be separately
owned, some pooled 50-50, and some shared in proportion to how much
money each contributed toward the purchase price or how much labor
each put into upkeep.
Expenses during the relationship. How will you divide the day-to-day
costs for food, utilities, laundry, housing, and the like, especially if
expenses go up or incomes go down? Here are some suggestions of ways
you can share expenses.
• Share and share alike. The couple has only one checking account.
They both deposit their paychecks into it and pay all household bills
out of it. Over the course of the relationship, incomes shift and who
earns more varies year to year. They figure it all evens out in the
end, and whatever savings or debts accumulate are viewed as equally
shared regardless of who had the higher income.
• Split 50-50. Any time one person buys something for the house or
pays a bill, that person initials the receipt and throws it into a jar.
Every few months, they empty out the receipt jar and total up how
much each has spent. One then writes the other a check to even
things up.
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• Each contributes in proportion to income. This works especially well
for people with large income discrepancies. If one partner earns
$100,000 a year and the other gets Social Security, the partner with
less income will never keep up. Under this plan all expenses are
divided in proportion to earnings.
Caution
Watch out for gift tax issues. Income pooling can trigger gift tax
problems for high-earning partners, so if there’s a big discrepancy, talk to an
accountant before making decisions about how you will deal with sharing your
money.
Cooling Off Clause
Consider including a clause to remind yourselves of your commitment
should the stress of a moment threaten to drive you apart. We call this
a “cooling off” clause. Although it’s not always enforceable in court, it’s
an excellent expression of intention. It can simply state that if one person
wants to leave the relationship, he or she will take some time to cool
off before grabbing the cat and the good wine glasses and heading for
the hills. Imperfect souls that we are, we make a lot of hasty, irrational
decisions when we’re hurt or angry that we later come to regret. A cooling
off provision can give you time to try to work things out.
Noel Coward understood the value— and the limits—of this kind
of agreement in Private Lives. If either spouse called “Solomon Isaacs”
during a fight, a truce would immediately begin. It worked well until
one day, when the husband cried “Solomon Isaacs” and his wife broke a
record over his head, shouting “Solomon Isaacs, yourself.” Cooling off
clauses don’t always cool people off, but you can try.
Here are a few sample cooling off clauses:
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Option 1
In the event either person is seriously considering ending the relationship,
that person will take a vacation, finding another place to stay, whether
with a friend or at a hotel, for at least one week before making a final
decision. At least two more weeks will pass before we divide the property.
In addition, we agree to attend at least one counseling or mediation
session if either one of us wants it.
Option 2
Either of us can request a cooling off period for any reason, including that
we are fighting. We will spend one week separately. At the end of the
week, we will meet and try to discuss our difficulties rationally, and with
affection for each other.
Option 3
At the request of either one of us, we agree to attend a minimum of
four counseling sessions with a friend or professional before making any
irrevocable decisions concerning our relationship.
If you wish, you can specify who you will meet with for counseling.
Your choices are a professional mediator, an attorney-mediator, your
therapist, a trusted friend, a group of three colleagues, the minister of
the local gay church, or anyone else you know. Be creative to get the
best person for the two of you. For example, many years ago, a New
York couple split up. They needed help resolving a few issues and wanted
someone who shared their experiences as African American lesbians. They
called the late poet/writer Audre Lorde, who met with and assisted them.
You might also look to see if a local gay and lesbian group or counseling
center has any organized mediation or arbitration services.
Arbitration and Mediation Clause
If you split up and disagree over a provision in your contract, you have
several ways to resolve the conflict. Mediation is an increasingly popular
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option, and for good reason. It keeps the parties involved in the resolution
process, is cheaper and faster than court, and can help to preserve or even
improve communication. If mediation isn’t successful, binding arbitration
can also be less expensive and time-consuming than litigation. You can
include a mediation-arbitration clause in your contract and spell out
exactly how you want to proceed.
Mediation is an informal process where you, your lover, and a
mediator work together to reach a mutually satisfactory compromise.
You then write out your agreement, agree to be bound by it, and sign it.
No decision is imposed on you. Many attorneys and therapists serve as
mediators for couples splitting up.
Tip
If you want the mediation to focus on practical resolutions, rather
than emotional undercurrents, an attorney-mediator might make the most
sense for you. An attorney-mediator also will likely be able to help you draft an
agreement setting out the resolution. However, if emotional dynamics are keeping
you polarized, a therapist-mediator might be a better option. Sometimes, lawyers
and mediators work in teams as comediators. For some couples this is a perfect
combination.
Arbitration is quite a bit different. It, too, can be informal, but you
and your partner each present your version of the dispute to a person or
persons you’ve designated and empowered to make a decision. Unlike
mediation, the decision is made by the arbitrator, not by the two of you.
The parties usually agree in advance to be bound by the arbitrator’s
decision—otherwise, there’s little point to the process. This means that
if one of you sues in court, the court will merely enforce the arbitrator’s
decision. Business and labor disputes have been resolved through
arbitration for years, partly because having a dispute settled quickly can
be as important as who wins and who loses.
Below are two sample mediation-arbitration provisions you can add
to any agreement. For example, the first sample agreement doesn’t allow
lawyers to be present at the arbitration. If you have significant assets at
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stake, you might prefer to delete this provision. If you don’t like these,
take a look at other mediation and arbitration provisions in contract
forms books available at local law libraries.
Sample Mediation-Arbitration Clause #1
Any dispute arising out of this agreement will be mediated by a third person
mutually acceptable to both of us. If we can’t agree on a mediator, we will
each appoint a representative and the two of them will choose the mediator.
The mediator’s role will be to help us arrive at our solution, not to impose
one on us. If good-faith efforts to arrive at our own solution with the help of
a mediator prove to be fruitless after a minimum of four sessions, either of us
may make a written request to the other that our dispute be arbitrated. This
will be done as follows:
1.Either of us may initiate arbitration by making a written demand for
arbitration, defining the dispute, and nominating one arbitrator.
2.Within five days from receipt of the demand, the other will either
accept the proposed arbitrator or nominate a second arbitrator.
3.If a second arbitrator is nominated, the two nominated arbitrators will
within ten days nominate a third person, who will serve as the sole
arbitrator.
4.Within 30 days, an arbitration meeting will be held. Neither of us
may have a lawyer present, but we may consult with an attorney
beforehand and we may present evidence and bring relevant witnesses.
The arbitration will be conducted according to the procedures of the
American Arbitration Association.
5.The arbitrator will make a decision within 15 days after the hearing.
The decision will be in writing, will be binding upon us, and will be
enforceable by a local court.
6.If the person to whom the demand for arbitration is directed fails to
respond within five days, the other must give an additional five days’
written notice of his or her intent to proceed. If there is no response,
the person initiating the arbitration may proceed with the arbitration
before the arbitrator designated, and any award will have the same
force as if it had been settled by the mutually selected arbitrator.