Americans are marrying later in life and less often, and the number of divorces is on the decline according to Statista.Com. This trend is very noticeable in my practice. I regularly meet men and women with problems resulting from living with their romantic partner without getting married. This can create legal nightmares.
Owning property. If an unmarried couple pays for property together then the relationship fails, there is no “cohabitation court” that provides for the equitable division of property as in a divorce. A civil lawsuit can be filed to divide the common property, but there is no presumption of equal contribution as in a divorce. Even if the couple eventually marries and later divorces, the financial investment in the property made before marriage must be proven. Worse yet, if the property is owned by only one party, the non-owner gets nothing for their contributions toward the purchase of the property made outside of marriage unless specifically protected by some sort of contract or lien.
Sharing Credit. We often see couples purchasing cars together or co-signing for debts because one of the parties has bad credit. (This should be a huge red flag.) If the party with bad credit doesn’t pay, the creditor will come after the co-signer to collect. The missed payments will show up on both credit reports. Worse yet, if your name is not on the title, your ex could be driving a car that you are stuck paying for.
Having Children. Once you choose to have a child with someone, you can’t undo it. A parent can’t “sign their rights away” without agreement from the other parent and the Court. It is also highly unlikely that anyone will get sole custody. Courts will hold both persons accountable for physically and financially caring for the child. Often, we see Fathers whose name was not added to the birth certificate or who want the child to have their last name. Single Mothers are not required to place the Father’s name on the birth certificate, nor are they required to give the child the Father’s last name. If the Mother doesn’t agree, then the Father must file a paternity/custody action to obtain his legal parental rights over the child. The child typically gets a hyphenated last name.
Death and Taxes. An unmarried couple with a child has some tax advantages over a married couple if looking only at the of the standard deduction. A married couple in 2019 received a standard deduction of $24,200. An unmarried couple received a $12,200 for one partner and $18,350 for the other partner that claimed the child, a total exemption of $30,550. It is impossible for me to state whether a married couple fares better or worse than an unmarried couple due to all of the potential tax credits and deductions that might be available. But it is very clear that a married couple fares much better when it comes to tax issues at the time of death because they are completely exempt from Kentucky Inheritance tax and are also potentially eligible for social security benefits from their spouse. Unrelated persons must pay inheritance tax and are not eligible for social security benefits from their partner.
I understand why people want to live together before marriage, but there can be serious, life-altering consequences. Lay the ground rules. Keep your finances separate. Consult a lawyer to protect yourself.