Before you put pen to paper, we have three bits of advice:
Maintain Open Communication
You have to talk to each other, and talk honestly. Communication without judgment is critical.
Consider Your Shared Goals
A Partnership Agreement is about what you can build together. Unless you have clarity and consensus on what that shared life will look like, you can’t properly plan for it.
Strive for Sincere Cooperation
You cannot approach a Partnership Agreement as a zero-sum negotiation “in which one person’s gain is another person’s loss.” It’s about what you both will gain. If you or your partner aren’t satisfied with any aspect of it, then it’s not a true Partnership Agreement.
OK, let’s get to it.
We’ve brainstormed a basic blueprint for your Partnership Agreement process. There’s no “right” way to approach it. You might blast through it all at once, or tackle it over time; some couples will read through it together, while others might review it individually before coming together to discuss their answers. It isn’t meant to be comprehensive, and of course, in no way does this replace the valuable advice of professionals. If you have questions about anything on this list, or concerns about something that isn’t, you should find the resource you need (a family lawyer, a financial planner, a therapist). The cost of seeking expert help is well worth it when it comes to your future.
1. Learn the Law
Know your legal rights in your state—individually, as a couple, and as divorcing spouses. Internet and digital resources are a great place to begin, but you can’t get a J.D. from Google. A family lawyer licensed to practice in your state can educate you.
2. Define and Disclose
Gather the paperwork for any and all accounts, trusts, debts, loans, stocks, investments, and life insurance policies. Sit down with your partner, and explain to each other what these things are, and how they might be impacted. Regardless of if you have outstanding credit card debt or a substantial inherited trust, now is the time to come clean.
3. Get Real about Real Estate
Real estate is likely to be one of the largest assets—if not the largest—you will ever have either as an individual or as a couple. (This also makes it a lightning rod for divorcing couples.) It deserves its own spot on the agenda. Here are some points to tackle:
Do either of you, separately or together, own property?
If you own property individually, will you update the title after the marriage?
If not, and your spouse is contributing financially to the expenses and upkeep of your property, how will they be compensated?
If you own property together, what would you do in the event that you separate?
If you plan to buy property together, where will the down payment come from? Will you both contribute equally? If family members will be giving or loaning money towards a down payment, what impact does this have on your ownership?
4. Clarify Financial Goals
Research suggests that opening up to each other early on about your “money preferences” increases the odds of being happy in the relationship. Here’s what we mean by that:
Do you have any explicit goals, such as becoming debt-free, owning a home, or retiring early?
Do you want total transparency and collaboration about spending decisions, or would you be happier with some degree of privacy and autonomy when it comes to personal decisions like discretionary purchases? Is there a monetary threshold at which a discretionary purchase becomes one requiring joint discussion?
How do you plan to structure your household finances? Do you want individual or joint accounts, or a mix of both (for example, a joint “housekeeping” account and individual checking accounts)?
How will you budget? Will each of you have the same budget, even if one spouse earns more?
How will you handle savings, and loan repayments if applicable?
How will you manage investments like stocks, mutual funds, and retirement accounts?
If you don’t have access to traditional employer benefits (401k, health insurance, etc.), will you have alternative arrangements? What will those be, and how will they be funded?
Do you plan to jointly engage in philanthropy? What causes are important to you, and why?
5. Prepare for Parenthood (if that’s your choice!)
Do either of you have children from a previous marriage? How will they integrate into your new life together, and what are your financial obligations towards them? Do you claim them as dependents on your tax?
If you want to have children, how many?
How will you handle parenting duties, including childcare?
Will one of you take a lesser-paying job with more flexibility, or even leave the workforce, to care for them? What are the expectations and conditions around this choice? How will you handle personal and household finances? Will the stay-at-home spouse be compensated and provided for? How will that partner retain financial independence and a feeling of equality in the partnership?
Do you want them to be privately educated and/or have the choice of attending a private college or university? Are you willing to take out loans for this if necessary? If family members want to contribute to education costs, how should they do that?
6. Face Family Obligations
Do either of you have elderly parents, siblings, or other relatives who may need financial assistance? How will you approach and provide for those needs?
Do your parents have long-term care insurance or another means of financially providing for nursing home fees and other expenses, or do you anticipate being financially responsible? How will that work?
Do you anticipate one or more family members—aging parents, for example—moving in with you?
7. Plan Ahead
Do you anticipate any kind of inheritance, financial or otherwise? Will it be life-changing? (Are we talking thousands of dollars, or millions? Your grandfather’s boat, or your great-aunt’s prized Picasso?)
What impact could this have on the power dynamic of your partnership?
Will it become part of your joint estate, or do you want to stipulate that it will remain separate property?
Have you discussed plans for such a windfall with your partner? (Would you make a significant donation to charity or buy a new home? Sell a valuable piece of jewelry at auction, gift it to your spouse, or hold onto it for your children?)
8. Provide for Pets
We care deeply about our pets, and they are a huge financial investment. (By 2018, some estimates pinned the pet market— from vets to dog walkers to food to toys—at nearly $87 billion.) Pet “custody” is also becoming a key issue in divorces, and state laws are catching up. Some things to consider:
Who originally owned the pet, or has the pet always been jointly owned?
Who currently pays for pet expenses (such as food and routine vet care)?
If your pet had a medical emergency, or other condition requiring complex care beyond the norm, how would you pay for that?
In the case of a separation or divorce, who would take on the care of the pet?