How to Go Dutch in Love

Are you planning to move in together, or are you about to buy a house and have children? That’s certainly exciting and fun, but it’s also a moment to think carefully about what you want to agree on regarding household costs and how you want to share them.

For people getting married, the law provides a stipulation regarding what can be considered household costs and how these should be shared. Married couples can also make agreements about this in their prenuptial agreements, which may differ from the general legal provisions.

It can be challenging to start discussing the sharing of household costs. When is the right moment? And what is a fair agreement? What actually falls under household costs?

The laws applicable to married couples do not apply to cohabiting partners, which means that cohabiting partners must rely on general property law (not marital property law). In a cohabitation agreement, partners can agree to align themselves with the legal rules applicable to married couples or make other arrangements.

This means that there are no standard legal provisions for cohabiting partners that determine how they should deal with household costs.

There are more and more cohabiting couples, some with a cohabitation agreement, but often without. A desire for children, having children, or buying a house is not always a reason to get married. The step to cohabitate is not always a conscious one. Sometimes, someone never leaves after the first night, or one partner moves in gradually, or there’s an emergency because the other has no home anymore.

It may happen that you have been living together for years, have children, and live in a bought house, but there are no (formal) agreements in place.

It can be challenging to start discussing the sharing of household costs. When is the right moment? And what is a fair agreement? What actually falls under household costs?

Moreover, our ideas about relationships have changed. Since attraction and romance are seen as the main success factors of a relationship, the financial aspects of the romantic bond have faded somewhat into the background. Talking about money in romantic relationships is not considered romantic. People often indicate that it leads to arguments and tensions. This makes discussing financial matters uncomfortable and may feel unnatural when making agreements about the costs of living together and how to share them.

So why is it important to discuss this together and make agreements (formal or informal)?

A Better, More Sustainable Relationship & Preventing Unnecessary Conflict

It is scientifically proven that people who talk about financial matters and know each other and themselves in this area are more likely to have a sustainable relationship. When you make clear agreements and regularly discuss them, and both review the finances together, you are more connected and aware of where you stand and what you can expect from each other.

If you were to separate at some point, there might be a desire later on from one or both partners to settle accounts, take stock, and rectify things that feel unfair. This can lead to conflict, or you may have no ground to stand on in court if you haven’t kept proper records. If you know exactly what you consider household costs and have kept track of them and regularly settled accounts based on your agreements, then there is nothing more to claim from each other, and you are both better informed about what you each contributed.

However, this often goes wrong. Usually, cohabiting partners do not settle household costs during the relationship and later want money from each other, or they are unaware that certain costs are investments and not household costs.

Or you may have paid for all the groceries and utilities while your partner handled the mortgage interest and repayment, only to find out later that the repayment on the mortgage is considered an investment and not a household cost, leading to a situation where you have no claim to a portion of the property’s equity.

With an interest-only mortgage, it might even be that you have always contributed to the mortgage interest, but since the property is not in your name, you may have enjoyed living there but built up nothing. You have then contributed to the investment of the other person.

Without a cohabitation agreement that states otherwise, there is also no rule that at the end of the cohabitation, any excess payments made over the duration of the cohabitation will be settled. Instead, there is a statute of limitations of five years, which may have already expired when the cohabitation ends.

People can become very angry or disappointed at the end of this process. They feel cheated and unfairly treated. Trust in each other can take a further hit, and these issues may also affect your parenting (if there are children).

Going to court is not as easy as it sounds, and you need to substantiate your claims very well. For cohabitants, there is no comprehensive procedure where everything is regulated (like the divorce procedure). Therefore, you must go to the civil court. This is very costly and definitely requires a lot of negative energy and time.

There are plenty of reasons to start a conversation about this. In this blog, we will explain what household costs are and how you can divide them.

What Are Household Costs?

The term household costs does not have a statutory definition in the law. In the parliamentary history (TM, Parl. Gesch. BW Book 1, p. 242), it refers to the general interest and what is consumed or used for running the household. Reference can be made to Article 1:84 BW, which applies to married couples: the concept of household costs pertains to costs related to the common interest. It is assumed that all expenditures serving the physical and mental well-being of the spouses can be classified as household costs. Household costs include what is consumed or used in the household and expenditures made to keep the household running. 

In jurisprudence, which consists of court rulings that provide additional rules on how laws and certain facts and circumstances should be assessed, it is often stated that it must be about the costs of the joint household.

In a cohabitation agreement, you can make agreements about what falls under household costs, such as the costs of children growing up in the family, food costs, vacations, cars, utilities, costs of loans for purchasing a home and joint possessions, maintenance costs for the home, or rent.

You can also make arrangements about how you will bear these costs. Usually, reference is made to the statutory provision for the obligation to bear household costs from Article 85 of Book 1 BW, which states that parties will bear household costs in proportion to their income, and if that is not sufficient, their assets. However, it is possible to make other agreements about this, such as splitting costs in half or in percentages.

But what is considered income? It is important to include clear definitions of income in a cohabitation agreement, especially if the partners have a business. Does income from assets count as well? It is also essential to regularly review these agreements when changes occur.

Important moments for revisions may include:

This can be important because otherwise, there may be financial consequences that can affect you for a lifetime. An example of this:

A man and a woman moved in together when they both had nearly equal incomes. They agreed to split household costs 50/50. They have children, and the woman decides to work part-time. She earns less, while the man earns more. The woman has no money left to contribute to her pension or to save, while the man does. The consequence is that the man eventually has more pension and savings, and the woman may not be able to catch up.

Cohabitation Agreement or

Implicit Agreements

Not only do agreements in a cohabitation agreement or written contracts count, but jurisprudence also states that implicit agreements can be considered agreements. It is, of course, easier to prove an agreement that is documented and established by a notary after both of you have received information from the notary than to prove agreements that have only been verbally discussed between you. However, discussions can arise over the interpretation of written agreements, and if there is a difference in how the agreements should be interpreted, it must be determined based on the so-called Haviltex criterion according to the parties’ intentions.

The derogatory and supplementary effects of reasonableness and fairness apply to the relationship between cohabitants. This means that although agreements may be lacking, specific facts and circumstances can give rise to retroactive reimbursement obligations.

What Kind of Agreements

Can You Make and How?

Splitting Costs in Half: This means that each party takes 50% of the costs incurred. As long as you both earn approximately the same and can continue to earn that way, this is a fine arrangement. However, if you want to share your lives through thick and thin, this can lead to an unfair distribution if one of you earns less due to caregiving responsibilities, illness, or other circumstances. It is important to continue discussing a fair distribution. The example above shows how an unequal situation can arise.

Costs in Proportion to Income: If it is clear what you mean by income and you regularly examine and discuss whether this ratio and the concept of income are still adequate for your situation, this can be a good way to distribute household costs since the partner earning less also retains money for personal expenses and for saving for retirement. This provision also aligns with the legal provision discussed above.

To know how much you pay and what you have left, it is important to have an overview of household costs and what you consider them to be along with your income data:

Example of the calculation:

Of course, you can also work with different percentages or divide costs among specific categories. The latter happens regularly but can lead to unequal situations depending on who pays for what.

Starting the conversation can feel very uncomfortable, but it can also be fun and intimate. It’s certainly a good idea to outline together what you consider the costs of the shared household. If you find it difficult to discuss this, or if you need well-tailored agreements, you can schedule a meeting with me to discuss this under guidance, and I can formulate the agreements for you. These can be included in a cohabitation agreement by a notary.

If you are considering ending the relationship and want to know the financial consequences of that, you can also request a consultation or you can schedule an appointment together for mediation. As a mediator, I can assist you in making agreements that feel fair to both of you, ensuring that you can both move on with your lives. For example, if you’re worried about not being able to stay in the home, I can work with the financial mediator I collaborate with to come up with solutions that allow for more possibilities.

If you have any questions, please feel free to contact us at info@boomsmashriber.nl or call 020-639 21 12.