Question: I am 59 and my male friend who is 62. Both of us have been divorced, and neither wants to remarry, but we want to sell our homes and purchase a home together. Each of us has income and is willing to contribute to the downpayment and pay the monthly payments. We have agreed that he will contribute 60 percent and I will contribute 40 percent, and we will share the mortgage payments, taxes, insurance, and other expenses of ownership equally.

Each of us will have the house for our lifetime and, at the second death, 60 percent will go to his two children and 40 percent to mine. We went to a lawyer who advised us 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, and he or she could then leave the proper percentage property to our respective children by his/her will. Although we trust each other, we know that wills can be changed, and someone could be left out. There has to be a better way.

Answer: Because state laws involving marriage are based on the unity of a couple's life and assets, married couples often take title as joint tenants with right of survivorship. In this way, neither spouse can change the title without the consent of the other. And no matter what the deceased spouse's will provides, the surviving spouse-owner will inherit the interest of the deceased spouse -- subject to outstanding mortgages and liens. While this is a good idea in some instances, in others it is financially ill-advised, especially if the survivor is in a nursing home.

Unfortunately, despite the fact that you have decided not to marry, by purchasing a residence together, you are getting “married” financially. And without proper planning, disentangling yourselves from the arrangement should your relationship terminate - or your estates should one of you die - can be most difficult and expensive without proper planning.

For the reasons you have stated, we agree that it is unwise to have title placed in your joint names with right of survivorship. That said, you may have several options, depending on the title laws of your state of residence. We suggest that you not try to handle this without the assistance of an experienced lawyer:

First, each of you could retain life estates, leaving remainder interests to your respective children in appropriate shares. However, in this way, you each will be making present gifts to your respective children, and neither of you will not be able to sell your interest in the residence without the consent of all of your children – which could become a bigger problem if a child predeceases you and leaves a spouse and minor children as owners of a share.

Second, depending on where you live, you may be able to take title based on your comparative contributions – 60-40; however, you must understand that this could lead to an unfair division of the sales proceeds later – if, for instance, you and your partner pay unequally toward the downpayment, but equally toward mortgage payments, taxes, and maintenance -- or if there is significant appreciation in value, division of the proceeds can be made more difficult.

Third, and probably the best option, would be for the two of you to enter into a co-ownership agreement by which you would apportion ownership and the division of proceeds on sale at the second death. Each of you would have the right to live in the residence until your death or a sale at which time the proceeds would be divided in an established fashion. Without a co-ownership agreement that clearly defines your intentions and mechanisms to resolve any disputes, you will be forced to depend upon expensive, yet inadequate, legal remedies that will probably not reflect your good faith intentions.

Your agreement should include provisions about who will pay the mortgage, insurance, taxes, repairs, and utilities - and what happens if the agreement is breached. In addition, should one of you move out and the other not be able to make the payments, there should be provisions allowing the remaining partner to rent the residence pending sale, options to purchase and sell under foreseeable circumstances, including death. And to avoid going to court should there be disputes, you can choose final and binding arbitration.

Because of the complexities of the questions involved, the ways in which you may choose to resolve any differences that arise, potential tax considerations, and other issues that are not covered here, please seek the assistance of competent attorneys who can help you prepare a co-ownership that expresses your intentions and protects both of you.