‘My company may IPO and make me a millionaire’: My boyfriend and I have a cohabitation agreement. If we split, would he have a right to my money?

He is listed as a beneficiary on a couple of my financial accounts, and vice versa. He also gets his health insurance through my company as a “domestic partner,” but we are not registered in our state as domestic partners.

If things go well, my current company of five years could IPO and make me a multi-millionaire. If we were to break up, does he have any right to those funds?

Happy Together in Tennessee

Dear Happy Together,

A cohabitation agreement is smart, especially if you own a home together. It is a contract — a de facto prenuptial agreement for unmarried couples. You and your boyfriend agree to the terms and conditions: What happens to the house if you split up or one of you predeceases the other? Do you sell the property and split the proceeds 50/50?  Who is your healthcare proxy?

Your contract covers your property ownership and as separate/sole property. That said, your salary should never be deposited in a joint bank account. It would not hurt to return to a lawyer to make sure you cover issues such as debt and property acquired while you are together and, yes, your respective future earnings. The more detailed your contract, the better.

Marriage, of course, is a financial contract and beholden to the laws of the state — in the absence of a prenup. Tennessee is an equitable-distribution state, so if you were to get hitched, your marital assets would be distributed fairly and equitably (rather than equally). Tennessee does not recognize common-law marriage, but cohabitation agreements are enforceable there. 

The law is clear when it comes to unmarried couples in Tennessee. “Regardless of how much they love one another, or how long they have been living together as a couple, the law will still treat unmarried couples as separate individuals when it comes to property rights at death or separation,” according to Miller Upshaw Family Law in Nashville. 

“If a partner dies without leaving a will, Tennessee state law determines who will inherit his or her property,” the firm adds. “An unmarried cohabitating partner could inherit nothing. If two people decide to go their separate ways, but do not have a legally binding document in place for determining how their property will be divided, one partner could lose everything.”

Like a marriage contract or a prenup, a cohabitation agreement shows you trust each other enough to sign on the dotted line. But they only go so far. The longer you are together, the more your lives become entwined and enmeshed your finances become, bigger questions about investing in your future as a couple will come to the fore. I commend you in taking this one step — and one contract — at a time.

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