While living together contracts are sometimes made to protect each partner in the event of a breakup, more commonly, couples enter into them to communicate their needs and expectations, define their rights, and enhance one or both partners’ peace of mind at either the start of the relationship or when the couple makes a major purchase. By creating a well-crafted agreement, not only do you gain a better understanding of how you really want to own your property, but it also serves as a useful reminder if misunderstandings develop later or one of you perishes without a will. An additional benefit of a living together agreement is that if one partner is supporting the other, or if one partner has given up a career in order to take care of the home or raise children, the agreement will protect the dependent partner by ensuring that issues of support and compensation are stated in writing.
If you are in a long-term and serious partnership you should consider the legal consequences of dealing with money and property. If you plan to mix assets or share expenses, you should put your agreement in writing, especially if a lot of money is involved. If neither of you have any money, with no property and little prospects on the horizon, there is still benefit in deciding how money and or property will be dealt with if it one day arrives. In addition, practical issues of day-to-day living like how expenses will be paid can be established at this time.
A written agreement, though no substitute for trust and communication, is essential and can do wonders to reduce paranoia and confusion and help people deal with one another fairly. While there aren’t any national statistics on the number of unmarried, cohabiting couples enter into living together contracts, some lawyers say such contract are rising as a result of more couples living together and new legal rulings that support the validity of living together agreements.
Legal Rules Governing Living Together Contracts
Predominantly, courts and judges — not legislatures — have made the legal rules governing living together contracts. The leading court case is the well-known Marvin v. Marvin, 557 P .2d 106, decided by the California Supreme Court in 1976. It involved the actor Lee Marvin and the woman he lived with, Michele Triola Marvin; who used his last name even though they were not married. In its Marvin case decision, the court announced what later became the common legal principles governing the right of unmarried couples to make contracts. First, the court ruled that marital property laws do not apply to couples who are not legally married. Next, it recognized that unmarried couples are here to stay, and finally, the court declared four contract principles:
- Unmarried couples may make written contracts.
- Unmarried couples may make oral contracts.
- If a couple hasn’t made a written or oral contract, the court may examine the couple’s actions to decide whether an “implied” contract exists.
- If a judge can’t find an implied contract, she may presume that “the parties intend to deal fairly with each other” and find one partner indebted to the other by invoking well-established legal doctrines of equity and fairness.
In the aftermath of the courts Marvin ruling in California, other states have upheld the application of these principles made by unmarried partners — both straight and gay. Based on the state, however, a court may abide to different legal rules. Nearly every state’s courts and the District of Columbia now enforce written contracts between unmarried partners; with Illinois, Georgia, and Louisiana as exceptions. Additionally, most states also recognize oral contracts; Texas and Minnesota are the only states that have passed laws requiring contracts to be in writing; while New York and New Mexico have been unwilling to recognize implied contracts.
You can avoid a host of legal problems by putting your living together agreement in writing. Contact attorney Marc Wander to do so, today.
Marc H. Wander is a partner of the Bloomfield Hills law firm of Witzke, Berry, Carter &Wander, PLLC. Marc has been licensed to practice law in Michigan since 1992. Marc’s practice is devoted to estate planning and business succession planning. Marc is a member of the Probate and Estate Planning Section of the State Bar of Michigan and is a prior Chairperson of the Oakland County Bar Association Tax Committee. He is a frequent continuing education speaker to insurance agents, financial advisors, CPA’s and financial industry organizations. He has also been heard on WJR Radio. Follow Marc on Twitter @MarcWander