The traditional progression of a relationship is marriage then homeownership. However, many couples are postponing marriage and purchasing property together first. Owning joint property before marriage can cause problems down the road if the couple does not plan ahead with the assistance of a knowledgeable attorney.
If you are considering buying property with your significant other prior to marriage there are several issues you both must be ready to tackle.
The first is how are you going to title the property? As an unmarried couple, you have two options, tenants-in-common or joint tenants with right of survivorship. As tenants-in-common you can each own unequal portions of the property, but if one owner dies, their portion of the property passes through intestacy (to their parents, siblings, or others as described by state law) or to beneficiaries under their will. If you choose to own property as joint tenants, each party owns an equal portion of the property and if one owner dies, his or her portion of the property passes to the other owner (the right of survivorship). Deciding whether joint tenancy or a tenants-in-common arrangement will be best for you will depend on your unique situation as a couple.
Cohabitation agreements are a great way to put your intentions in writing. Through this contract, a couple can state which expenses each person is responsible for and how the property will be divided if the couple separates during the time they own the property. Another question that can be addressed in the property agreement is what to do if one party becomes disabled or otherwise cannot work and is unable to contribute the full amount toward the expenses of the home. Without a cohabitation agreement, if one party wishes to remain in the home, a judicial action to partition the property can be costly. It is best that each party have his or her own attorney review and approve the cohabitation agreement.
Creating or updating your estate planning documents will also help you and your significant other divide your home and its contents in the event of one of your deaths. If you choose to title your property as tenants-in-common, you can give your property to the co-owner through a Will or a trust. While a joint tenancy gives the co-owner the sole title to your home if your significant other passes away, it does not include the items of tangible personal property inside. A Will or a trust gives each partner the ability to state how their tangible personal property should be distributed in the event of their death.
Remember, you are never too young or too old to plan for the future of those you love.
The Law Office of Jane Frankel Sims, LLC
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