Do Unmarried Couples That Live Together Have Community Property Rights in California?
When two people get married, shared property is a given. As the saying goes—”What’s your is mine and what’s mine is yours.” Marriage and divorce laws also support this idea. Yet, the landscape in California and throughout the United States has changed in recent decades. More and more couples, homosexual and heterosexual, are opting for cohabitation or domestic partnerships.
Laws about community property rights between unmarried couples vary greatly among states. Some states grant community property rights to unmarried couples through common law marriage after the couple has spent a certain amount of time living together. California’s laws do not recognize common law marriage, nor do they grant community property rights to unmarried couples without an agreement. Yet, it’s important to consult with a lawyer because some counties and cities grant rights to domestic partners.
Some couples prefer to avoid marriage because, upon separation, partners need not follow strict laws about dividing personal property and assets. Others worry about what might happen to shared property if one partner dies; not having the protection afforded under marriage is a drawback for some. Regardless of which side of the issue your relationship lies, we provide the following overview of cohabitation property agreements in California, which are tools unmarried couples use to ensure they enjoy some benefits of married couples without actually tying the knot.
What Is a Cohabitation Property Agreement?
A cohabitation property agreement is a contract between partners who live together. It’s similar to a prenuptial agreement that people make before marriage. The contract is legally binding and it lays out the terms of property ownership within a defined relationship.
What Type of Information Is Contained in a Cohabitation Property Agreement?
Unmarried couples can include a wide array of information in a cohabitation property agreement. Some examples of common information you might find in one of these contracts include:
- Ownership of real and personal property such as homes, cars, boats, motorcycles, vinyl record collections, or any other valuable property you can imagine
- A budget that includes income and expenses and the extent to which they are shared
- A plan with regard to who manages bank accounts, credit accounts, insurance policies, and other financial accounts
- Rights to make medical decisions if a partner becomes incapacitated
- A plan for the dissolution of the cohabitation property agreement in the event the couple chooses to part ways
- Guardianship rights if one partner becomes disabled
Real estate is often the largest asset most people purchase in their life. Entering into a cohabitation property agreement is one way to protect assets and individual property when a couple chooses to buy a home together. If real estate purchases are a part of a cohabitation property agreement, you might also find the following information:
- Terms of ownership that assign rights to one partner if the other partner dies
- Terms of transferring ownership, specifically creating a plan for one partner to buyout the other that includes agreement about appraisals, payment terms, and equity
- The terms of ownership listings. Couples can choose to assign rights so that a partner will assume ownership of the home in the event of death or that a portion of the home will transfer to someone named in a will.
- Terms of separation that provide a plan for what happens to the property in the event that the couple chooses to separate
What Is the Difference Between a Cohabitation Property Agreement and Marriage?
The vast majority of family laws and property laws that apply to marriage do not apply to unmarried couples. Marriage is also a recognized legal status that comes with certain rights. For example, if a married couple has been married for five years and one spouse suddenly dies, the surviving spouse typically receives all property, insurance benefits, and death benefits. In comparison, an surviving partner has no property rights or benefits, even if the partners lived together for 25 years.
A cohabitation property agreement is legally binding, but it does not provide the same rights to unmarried couples as married couples enjoy. Some key differences include:
- Unmarried couples need to file income taxes independently.
- Unmarried couples can only pursue compensation in the event of separation in accordance with the terms of the contract.
- No compensation similar to spousal support in the event an unmarried couple breaks up.
- A partner can only receive assets after death based on the terms of the contract, a will, or a living trust. Intestate laws do not govern unmarried couples like they do married couples.
California does recognize domestic partnerships, which are similar to marriage but do not offer all the rights associated with marriage.
Why Should You Create a Cohabitation Property Agreement?
Some couples avoid creating a cohabitation property agreement because they think of them as ensuring a disastrous end to a relationship, similar to the way some think about prenuptial agreements. Creating a contract between your partner does not mean you expect separation. Yet, both of you are protected in the event separation does occur. Some common reasons for creating a cohabitation property settlement include:
- An agreement clearly outlines financial responsibilities within a relationship to ease potential tension or problems later on and aid in the resolution of future disputes about money and property.
- An agreement protects assets from going to the wrong person in the event that one partner dies. Cohabitation property agreements clearly define the rights of survivorship, making them just as important for couples who stay together as they are for those who end up separating.
- Couples can create terms within a cohabitation property agreement that are more flexible than the terms of marriage or divorce.
Contact an Experienced Attorney Today To Draft Your Cohabitation Property Agreement
Pedrick Law Group has extensive experience helping families of all sizes deal with conflict, protect rights, and plan for the future. Contact us today online or at 818-325-3934 to learn more about creating a cohabitation property agreement and find out if it is the right relationship path for you and your partner.