Unmarried Couples: Basics of Your Property Rights
Most unmarried couples accumulate shared real estate, bank accounts, credit cards, property, and assets but have yet to consider how to divide the property if the relationship ends.
Couples often live together before they marry, and many live together indefinitely without getting married at all.
Property laws generally treat an unmarried couple as separate individuals with no legal rights or responsibilities if the relationship ends. Some states allow common-law marriage, which can alter the property rights of a couple. A few states offer domestic partnership or civil union statutes; however, parties must register as domestic partners to obtain the benefits.
Unmarried Couples and Property: Buying Property Together
Most long-term couples will face significant purchase decisions. Buying a house, a car, or other substantial asset during adulthood is typical.
Before you buy anything, decide if you will own the property jointly or separately. This will protect your rights if your partner dies or the relationship ends.
Different Ways To Own Property as an Unmarried Couple
A couple can decide to buy property together or add both people to the title. You must determine whether you will own the property as joint tenants or tenants-in-common.
Joint tenancy is a form of ownership where both people share ownership equally. All joint tenants will have equal interests in the jointly-owned property, typically 50/50.
Sometimes two or more people may own property as joint tenants. When one owner dies, the surviving partner(s) automatically take over the deceased partner's share. This is called the "right of survivorship." Joint tenancy is commonly used in the purchase of real property by married couples. At a party's death, a surviving joint tenant receives the property without having to go through the probate process.
You can decide to buy the property as tenants-in-common. This means each owner has a distinct share in the property. You determine the percentage of the share.
For example, if one party contributes 25% to the purchase price, the property share could reflect that percentage.
Remember: you do not have rights to their share of the property if a co-owner dies. This is the opposite of how joint tenancy works. If you were homeowners together, the deceased owner's share becomes part of their estate. It will be distributed as determined by the person's will or state intestacy laws.
Unmarried Partners and Property: Breaking Up
The division may be complex if a house or a vehicle is purchased jointly with both names on the title. This applies if you are joint tenants or tenants-in-common. The complexity increases if both parties' names remain on loan.
In general, you have the following options for splitting property that is co-owned after a breakup:
- Refinance the mortgage or loan in one party's name only. This would require the party who refinances to have good enough credit to qualify for a new loan or access to another co-signer.
- Sell the home or vehicle and pay off the lender (split the proceeds). This usually is not an attractive option if the property is worth less than the loan amount.
- One party keeps the home or car and makes the mortgage payments or car payments until they are paid off. This arrangement would require the party who walks away from the property to be comfortable staying on the loan until it is paid off.
- Let the bank repossess the home or car. This option negatively affects both parties' credit scores and is not often chosen.
Taking Legal Action for Property Division
Mediation is a good option if the former couple cannot reach an agreement on their own. A local family law attorney could also provide legal guidance for individuals in this situation.
If the property is in one party's sole name, that party has sole ownership. It remains that person's property on separation. The exception is if the other party can establish a common intention that they would be entitled to a share in the property.
Proving a common intention is difficult unless:
- You have a written agreement
- You can provide both parties contributed to the down payment, purchase price, loan payments, and/or maintenance
Unmarried Couples and Property: Death
Both people must consider what they want to happen if one dies.
Each person can create a will and deliberately designate the other partner as a beneficiary. If you don't take these steps, your estate will pass according to the laws of your state (called "intestate" laws) after your death.
Intestate succession is how a state distributes a person's property without a will. Estate law addresses how to resolve the deceased person's assets and liabilities.
One step that parties (married and unmarried) can take outside the will and probate process involves securing a life insurance policy. Life insurance proceeds can be paid to any designated beneficiary.
Intestate Succession: Dying Without a Will
Each state has laws, but the property is generally distributed to the deceased person's spouse and children.
The property will be divided among parents and siblings if the person is not married. After that, the distribution goes to aunts and uncles, nieces and nephews, and on to more distant relatives.
The deceased person's partner will receive nothing unless the couple had legal protections in place. If state law does not offer such protection, couples living together must create a will or other estate planning documents. It is vital to express your mutual long-range plans with your partner.
Creating a Will: The Basics
A will is a legal document. It lets people state their intentions about debts, property, and minor children upon death.
Will provisions must be carried out. The exception is if the requests are illegal or impossible. A will allows a person to do the following:
- Name beneficiaries to property
- Forgive debts owed
- Name guardians of children
- Create trusts
- Name an executor of the will
- Pay debts of the estate
- Disinherit relatives
Creating a will or trust is an effective legal method. It provides a way to protect your partner if you should die. Consult an experienced family law attorney for legal advice or use a DIY form to create the legal document. Having one will reflect your needs and wishes for your significant other.
Common Law Marriage Basics
- Live together for a specific amount of time (depending on your state law)
- Have the capacity to marry
- Both people must intend to be married
- Present yourself to friends and family as a married couple
More Questions About Unmarried Couples and Property? An Attorney Can Help
Most people realize that any property purchased or acquired by a married couple is subject to the marital property laws of their home state.
Can I Solve This on My Own or Do I Need an Attorney?
- You may want to consider creating powers of attorney or prenup agreements
- Getting an attorney’s advice is a good idea if there are children or substantial property involved
- An attorney can help you responsibly enter and exit cohabitation
Get tailored advice about property, finances, and child custody when living together. Many attorneys offer free consultations.
Don't Forget About Estate Planning
Living with a partner is an ideal time to create or change your estate planning forms. Would you like to add your partner to your will? Also, consider creating a power of attorney so your partner can access your financial accounts and bills. A health care directive is necessary if you want your partner to make your medical decisions if you ever become incapacitated.