Are Millennial Relationship Agreements a Good Asset Protection?
Millennials have a tendency to involve themselves in long-term relationships without getting married. Much like dating, there are no clear-cut rules on how assets are divided if the relationship ends.
When a couple is married, whether they signed a prenuptial agreement or not, state law protects their assets and property. However, in long-term relationships not bound by marriage, no such protection exists. So, what happens? Here Evie Jeang, Managing Partner at Ideal Legal Group, explains for Lawyer Monthly.
Millennials are accumulating a growing number of assets and more frequently making substantial purchases. It’s becoming increasingly commonplace for millennial couples in long-term relationships to make large purchases together, including joint ownership of vehicles and homes. Therefore, when these purchases are made, millennials should seek to protect their investments in the event that the couple breaks up earlier than expected, or if one party has contributed financially more than the other. Co-owning expensive assets further complicates disputes that arise, and surprisingly, such cases are litigated just like ordinary contracts and may yield unsatisfactory results for litigants.
To protect their assets, millennials should consider formal relationship contracts. Putting an agreement in writing, although not always convincing to a court, can help determine the intent of each party when the relationship began. In contract law, the courts look to the intent of the parties when the relationship manifested, and disputes can be resolved more quickly if there is a memorialization of those thoughts from the start.
Without a written agreement, the courts are burdened to rely on oral testimony, which can be highly unreliable. Oral testimony in these situations can be troublesome due to the emotions involved, the personal animosity or disdain for the other party, or simply the sheer amount of time that can elapse between a relationship ending and a dispute beginning.
Unlike ordinary litigation, family courts are courts of equity, meaning they seek to make every transaction “fair.” This has a profound difference on which remedies courts can afford litigants in matters. For example, courts can order both parties to do something that was not previously agreed upon if it is necessary for fairness between both parties in the transaction.
Unlike ordinary litigation, family courts are courts of equity, meaning they seek to make every transaction “fair.” This has a profound difference on which remedies courts can afford litigants in matters.
Like prenuptial agreements, creating relationship contracts can force a couple to examine their future. This allows for couples to acknowledge how they would split assets upon the dissolution of the relationship, and in this aspect, the couple becomes an entrepreneurial partnership. The courts can also delineate how the assets were gained, how funds were spent and earned, and how the current financial situation would best align with the couple’s intentions when they began the relationship.
Millennials can and should use contract law to their advantage. Unlike marriage, there are no default state laws to protect their interests in long-term relationships. However, contracts allow for parties to pre-determine their fate if a breakup occurs. This avenue can help the courts to establish an equitable remedy when disputes arise, which benefits all parties involved.