FAQ: Property Rights Of Unmarried Couples


FAQ: Property Rights Of Unmarried Couples

Here are some common questions that unmarried couples have about their property rights:

1. What issues should my property agreement cover?

If you are currently in a relationship with someone and you are living together or are planning to live together either before getting married or instead of getting married, you should consider whether or not a property agreement might be helpful in your particular situation.

In many ways, property agreements can be seen as simply yet another in the long list of insurance policies you may choose to put into place. However, in the case of property agreements, what you are “insuring” are decisions about money and property issues related to your living together as an unmarried couple, in the event of a breakup.

Here are some of the more common issues couples sometimes to address in property agreement:

2. When should I consider a property agreement?

Many people are under the impression that only wealthy couples need property agreements. While it is true that if both partners have very few assets and no children, the couple is far less likely to need a property agreement, there are many situations where couples of more moderate means would benefit from having a clear understanding of what their mutual obligations are to each other.

The more assets you acquire and the longer you live together, the more likely it is that a comprehensive property agreement will be a useful tool. In particular, there are three situations in which a property agreement is often a good idea:

  1. When either party has significant assets, income, or inheritances they want to protect;
  2. When a couple has acquired significant property together during the course of the relationship or plans to acquire such property; and
  3. When you have only known each other for a short period of time.

Either situation will automatically give rise to certain concerns with regard to each partner’s expectations and a property agreement can specify and clarify what should be expected of each of you.

3. If my partner and I purchase a house together. How should we deal with that in our property agreement?

Any two unmarried people can create a joint interest in property by acquiring it together, putting both names on the title, and choosing the form of title, whether joint tenancy (with or without rights of survivorship) or tenancy in common.

Joint property ownership can get especially get complicated when two unmarried partners both contribute to the purchase of property but only one partner’s name is on the title, or where only one partner pays for the purchase but both names are on the title.

If you own or plan to acquire property with your unmarried partner, a property agreement can help you address these issues by clearly specifying how your property is to be divided if your relationship comes to an end.

Property Rights Of Unmarried Couples

4. What is palimony? And should it be addressed in a property agreement?

Since it is so common for even the longest and most committed relationships to eventually come to an end, any unmarried partner who becomes dependent on the other partner for financial support would be wise to have a legally enforceable agreement outlining the couple’s intentions regarding financial support in the event of a break-up.

While a married partner who drops out of the workforce is likely to have some protection against the potential consequences of divorce in the form of alimony and shared marital property, an unmarried partner who leaves the workforce will have no such protection.

Palimony is a term used to describe financial support that is lawfully required to be paid from one unmarried partner to the other after a breakup. However, there is no such thing as “palimony” unless the unmarried partners have a written agreement clearly stating an obligation for one partner to provide support to the other after the relationship ends. A properly executed property agreement can give this partner a right to continuing support if the relationship ends.

5. My partner has a much higher income than I do. Should the property agreement cover who is entitled to my partner’s income and the things we buy with it?

In addition to providing security to a financially dependent partner, a property agreement should also include protection for the partner with significantly greater income or financial resources.

There are some circumstances where commingling of income and financial resources might create an unintended joint property interest between the financially weaker partner and the more financially well-off partner.

For example, if the couple has a joint bank account, each party might be entitled to 50% of the balance when they split unless an agreement specifies ownership in a different percentage. This should also be a consideration when the couple purchases items together. Other types of joint assets or accounts with significant value should also be addressed in your property agreement.

6. If one of us dies during the relationship, how much property will the survivor inherit?

Since unmarried couples don’t enjoy the same rights as married couples, unmarried partners do not automatically inherit each other’s assets. So, if one partner dies without a will, his or her assets will be distributed according to state law, and in most cases, these assets will go to siblings and other relative and very rarely to the surviving partner.

Because of this, it is important for unmarried partners to prepare wills, living trusts, and other legal documents and to hold property in joint tenancy in order to ensure that their assets are divided according to their wishes.

7. Am I financially liable for my unmarried partner’s debts?

Many people regard property agreements only as tools to protect the assets of a wealthy partner from the other partner in the event they split. But that is only one possible use for a property agreement. More often than not, a property agreement protects the assets of both partners––not from each other, but from creditors, whether one partner has more wealth than the other, or not.

For example, a lawsuit against one partner will not affect the property and income of the other partner, if the couple keeps their property and income separate. Tax liabilities and business debts will also not affect the property and income of the other partner if the proper property agreement is in place.

 It’s far better to make sure in advance that your property and income are protected than pay an attorney to sort these issues out later. With a property agreement in place, couples can specifically characterize any of their property as separate.

For the answers to other question regarding the property rights of unmarried couples, consult with an experienced family law attorney in the state in which you live.

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