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Property Ownership for Unmarried Couples
Jan L. Warner & Jan Collins

Question: I am 55 and my live-in girlfriend of six years is 47. Both of us have been divorced, and neither of us wants to get married, but we do want to purchase a home together. Each of us works and is willing to contribute to the purchase price and to make monthly payments. We went to a lawyer who told us that all we needed to do was to put the home in our joint names with a provision that the survivor would receive the share of the first of us to die. But we want to leave our shares to our respective children after the second of us dies. How can this be accomplished?

Answer: Buying a house may be relatively easy, but disentangling yourselves from the arrangement --- should one of you die or should your relationship terminate or should one of you become incapacitated --- can be most difficult and expensive because the you will not have either the benefits or remedies which are available to married couples. However, despite the way the law may look at your relationship, when you purchase a residence together, you become "married" financially.

That's why you should plan ahead now in an effort to try to avoid the many potential pitfalls that could crop up later. Before you close the transaction, be sure to understand that the way in which the property is titled carries with it a number of unforeseen consequences.

First, it is unwise to have the property titled only in the name of one of you because if that person sells the home and keeps the money -- or dies without a will and leaves it to antagonistic relatives, the other could be in court for a long time and lose his or her investment.

Married couples sometimes take title as “joint tenants with right of survivorship” so that neither owner can change the title without the consent of the other. If property is titled in this fashion, no matter what the deceased spouse's will may say to the contrary, the surviving spouse will receive the interest of the deceased spouse outside of the probate process subject, of course, to outstanding mortgages and liens. Survivorship deeds presuppose equal ownership.

While joint tenancy may have its benefits for unmarried cohabitants, -- like no probate upon the death of one partner, there are also drawbacks and neither of you will be able to make sure your children receive your half interest. In addition, there may be legal ramifications and difficulties should the relationship terminate. And, because you may not contribute equally, there may well be gift tax issues that must be addressed.

Since the economic relationship of unmarried cohabitants is not governed by state law and reflects "separateness" rather than combination of resources and obligations, taking title as “tenants in common” may be a better choice, but without more, there still may be problems. As tenants in common, you and your partner have the right to name by will who will inherit your share of the property. This means that if you die, your share of the property will pass to whom you choose in your will -- subject to outstanding liens. And if you don't have a will, your share will pass to those members of your family who are automatically selected by state law. This means that if you die, your children will become the owner of your half interest and, without an enforceable agreement to the contrary, your children could either require your partner to purchase their half interest or bring a lawsuit to sell the home. If you leave your half interest to your partner, your children will not receive anything.

Since we are confident that neither you nor your partner is interested in becoming a co-owner with members of the other’s immediate family, we suggest that you consider creating a revocable living trust to hold title to the residence and, within that document, set forth the conditions under which the residence will be used after the first of your dies, when and to whom the residence will be transferred at the death of the second to die, and what happens if the survivor decides to sell the residence before death.

We also suggest that you consider a co-ownership agreement that clearly defines your intentions and mechanisms to resolve any disputes so that you will not be forced to depend upon expensive, yet inadequate, legal remedies that will probably not reflect your intentions.

SoloFact: Since more and more elderly individuals are choosing not to marry but to cohabit in order to avoid the obligations of marriage, including long-term care expenses, it is essential that these relationships are accompanied by well-conceived, written plans that can only be prepared by experienced attorneys.

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