What are the financial risks of “Vat & Sit”?

The term “Vat & Sit”, or otherwise known as cohabitation, has become the preferred method of advancing a relationship to the next level.

Different attitudes, spending and saving habits are the main source of stress in any relationship. A couple who is committed and loving in every other aspect of their relationship may find that how they deal with money is a deal-breaker unless they resolve those differences.

To make sure you avoid these problems, both parties should agree to get the help of a legal adviser, who can provide objective input on formalising your living arrangement. This may include:

  • A written agreement – called a cohabitation agreement – in which you set out your obligations and rights as members of a couple. This becomes a legal document, so it needs to be carefully thought through.
  • A civil union, in accordance with the Civil Union Act, which includes an antenuptial contract in which both parties agree to be out of community of property, with or without the accrual system. This establishes whether you share each other’s assets and are entitled to a portion or half of your partner’s assets or liable for their debt.
  • Updates on changes to the law: it is still unclear when the proposed Domestic Partnership Bill will come into effect, but once it does, it will clarify and strengthen the financial rights of couples who live together.

It is generally a good idea to get a financial adviser to help you draw up a financial plan that suits your specific lifetime goals and needs. It is also a good idea to draft a will which will stipulate your last wishes in terms of how you would like your assets to be distributed in the event of your death.

A couple that plans for the future together succeeds together. Enjoy the financial freedom that good money habits can give you. Commit to saving and creating wealth as a couple, and reap the rewards together.

Are you in a “Vat and Sit” arrangement? How do you balance your financial interests? Tell us in the comments!

Please log in to comment

This site is optimised to load fast and save your data