"If you co-sign on a loan, you have to trust that person to not screw you over, to not tarnish your debt or stick you with debt if you break up, said Perry. You will still be on the hook for the debt - even if you are no longer together with the debtor. A bank doesn't care if your girlfriend cheated on you or your boyfriend disappeared without a word. Think twice before agreeing.Ĭo-signing means you are equally responsible for paying it back. So maybe your partner has bad credit, and needs to use your good name to secure a loan. On the other hand, if both names are listed on the lease, it's a good idea to have a plan on who is going to move out if the relationship ends, he added. they can kick you out and you have rights of recourse," said Vaughn. "Every time you get into a fight and you aren't on the lease.
If only one person is listed on the lease, it can leave the other out in the cold. Related: Is 2018 the year to buy a house?Ī rental lease can also get complicated when a couple splits. That document could specify who would get the home in a separation, how long the new sole owner would have to pay off the other owner, or how sale proceeds will be split. "The optimal way is doing a pre-purchase contract," he suggested. He suggested creating a contract that details exactly how the home will be handled if the owners go their separate ways. For instance, will both names be on the title? How will the mortgage be paid each month? What happens to the house in the event of a breakup?
"This way your real risk is a month's worth of financial exposure," Vaughn said.īuying a home with someone who isn't your legal spouse can expose all sorts of issues, warned Vaughn. If you still want to open a joint account with your significant other, experts recommended keeping the majority of your earnings in your own account and a limited amount - about one month of expenses - in the joint account. So unless you're confident both of you are in this for the long haul, it's best to consider keeping your bank accounts separate.
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He worked with a professional athlete who lost $700,000 in a joint bank account to his girlfriend after they broke up. "But if you set up a joint account, either person who is on it can take all of the money out." "A lot of people don't worry about a bank account," said Chicago divorce attorney Andrew Vaughn. Related: 5 money mistakes that could doom your new marriageĪnyone named on a bank account can withdraw all the money and never be seen again - and that's perfectly legal. "Look at what is coming in and out each month and then discuss who will be responsible in regards to bills." "If you are hiding any credit card debt, now is the time to tell them," she said.
Keeping secrets about money can stir up trouble in a relationship.īreak down how much money you earn and spend, and make sure you're honest about any debt you have, suggested Perry. It might be uncomfortable, but partners should have detailed - and frank - conversations about their finances.
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