Breaking up with someone you’re not married to can feel just as traumatic as an actual divorce, especially if you’ve been cohabitating. Emotions aside, you have to figure out who gets the apartment, that awesome sectional you both saved up for, maybe even the dog.
In fact, breaking up can be expensive if you’re not prepared. Fortunately, we’ve got you covered. Here are five steps you should take to protect your finances after a split.
1. Remove your ex from bank accounts and credit cards.
Lauren Anastasio, a wealth advisor at SoFi, said you should start by taking stock of any accounts that might have shared access. For instance, if you opened a joint savings account together, you’ll need to decide whether to remove one person’s name from the account or close it altogether.
“The most important thing here is to get the money split up and separated ASAP, particularly if you’re still in an amicable phase and both of you are wishing to be fair,” said Kelley Long, a certified public accountant, financial planner and member of the American Institute of CPAs Consumer Financial Education Advocates.
She noted that a time may arrive when at least one of you loses patience. “That can quickly devolve into vengeful behavior, including cleaning out financial accounts,” Long said. If both of your names are on the account, whatever funds are in it are considered to belong to both of you equally. So if your ex decides to withdraw it all, you’re pretty much out of luck ― unless you want to file a lawsuit.
“Same goes for credit cards,” Long said. “If either of you made the other an authorized user on a credit card account, revoke that as soon as you can.” Long noted that you can often do so online. But keep in mind that if your ex had access to the credit card number, removing them as an authorized user might not be enough since they could still use it to make purchases online or over the phone.
“If you’re at all concerned about malicious use of your account information, ask your card company to change your account number as well,” Long said. Just don’t forget to update any recurring payments.
In most cases, it’s a better idea to have your bank or card issuer update the account ownership rather than close the account. “Closing credit cards could impact your credit score, and liquidating investment accounts will likely come with tax consequences,” Anastasio cautioned.
2. Change the passwords on subscription accounts.
In addition to financial accounts, you’ll want to be sure your ex doesn’t have access to other types of accounts in your name, such as a cell phone or subscription service tied to a credit card. Even if you believe they’ll be mature and respect your privacy after the breakup, it’s not worth the risk.
“You don’t want to be surprised to find that your ex furnished their new apartment with your Prime account or ran up a huge data bill,” Anastasio said. “Take steps immediately to restrict access to everything, down to your Netflix account.”
3. Decide how to handle real estate.
It’s less common for unmarried couples to buy real estate together than it is for married couples. And when unmarried couples do take that plunge, there’s usually some sort of contract in place. Even so, the issue of dividing real estate does sometimes come up amid a breakup.
“Real estate is a difficult asset,” said Dana Stutman, a matrimonial attorney and founding partner of Stutman Stutman & Lichtenstein in New York. If you hold any property jointly, you have to consider factors such as who contributed to the down payment, who paid for renovations, who’s been paying the mortgage and who has been spending money to maintain the property when determining who gets to keep it.
Even if the property is in one person’s name, the situation can be complicated if you’ve both been living there, and especially if children are involved, according to Stutman. She noted that landlord-tenant law can come into play in this case.
“There’s not much you can do about dividing real estate if you’re anticipating breaking up unless you already have a contract,” said Stutman. “I would see a real estate attorney in your state.”
4. Divide personal property.
There are a few ways you can go about splitting up shared possessions such as furniture and household items. A good rule of thumb is that if it was yours before you were together, you keep it. And if it’s a gift, it belongs to the recipient.
However, these aren’t hard and fast rules. If you’re able to have a calm and amicable discussion, consider dividing possessions according to who will use and enjoy them most. “My ex and I traded several items when we broke up,” Long said. “He had an attachment to some furniture that used to be mine and I really wanted a rug he’d purchased, so we swapped and called it even.”
If there’s an item that you both want and you can’t come to an agreement, the best course of action is to sell it and split the proceeds.
Keep in mind that when it comes to pets, the law views them as property, even if you treat them like your children. “There’s no custody of pets,” Stutman said. This can be a particularly touchy subject to deal with, but try to do what’s in the best interest of your fur baby, even if that means letting them go so they can have a roomier yard or more attention.
5. Change your mailing address.
Finally, if you’re the one moving out, make sure you update your address as soon as possible so that you receive important communications and statements from financial institutions.
“If you’re not sure where you’ll land, it’s worth it to rent out a P.O. box for a while so that you can ensure you’re getting all of the mail coming to you,” Long said. “This was a point of contention with my ex... There were important pieces of mail that I missed because he decided it was time to move on before I’d had a chance to update addresses with everyone.”
Dealing with the financial side of breaking up
“When it comes to splitting up after many years together, the good news is that it’s most likely less messy than when you’re married,” Long said. “At a minimum, you (hopefully) don’t have to get lawyers involved.”
However, when it comes to dividing shared possessions, including money, the same concepts often apply. “Fair doesn’t always mean equal,” Long noted.
In a perfect world, when you and your ex first decided to move in together and mingle finances, there was a very clear understanding between the two of you regarding who owns what, and what happens if you do split. Having a contract in place, similar to a prenuptial agreement, can accomplish just that, according to Stutman.
Of course, hindsight is 20/20 and you might not be so lucky to have the terms of your relationship laid out on paper. But you do have the law to guide you.
“The most important thing to keep in mind is that if you’re not going to be married... you’re not avoiding the application of law,” Stutman said. “You’re merely avoiding the application of matrimonial or domestic relations law.”
Stutman noted that laws surrounding shared assets vary by state, so it’s important to find out what rights and limitations exist depending on where you live. And if you do need assistance navigating the law, it doesn’t hurt to consult a professional.
“Paying for a [legal] consultation is worth every penny,” said Stutman, who admitted that it is quite expensive. “I get that,” she added, “but it’s only penny wise and pound foolish” to not seek such help. After all, even if you’re only talking about $10,000, it can be worth paying a few hundred dollars for an hour consultation to protect it.