Domestic Partner Agreements: A Legal Leg to Stand OnSubmitted by Reed Financial Group on July 1st, 2019
As we journey further into the millennium, there are many forms of personal relationships. Today, unmarried partnerships are a fact of life. If you are in an unmarried partnership, one important consideration is how you share financial assets and obligations. Married couples have the benefit of the law to protect their rights, dictate their responsibilities, and guide the disposition of property in the event of separation or death. On the other hand, few, if any, laws govern the rights and responsibilities of unmarried partners. If you are planning on “sharing” your lives, here are some questions you might want to answer:
• What right do you expect to have to each other’s income now, and if your relationship ends?
• How much responsibility will you each assume for household expenses? Will you split costs according to income, use, or some other measure?
• Will you share joint bank accounts and credit cards? If so, how may they be used?
• Who owns the property you each bring into the relationship? Who owns the property you acquire together, and how will you divide it if you separate?
• What are your intentions for the distribution of your property if you die?
Covering Income, Expenses and Property
A domestic partner agreement provides a legal way to address these concerns. It is a written contract between unmarried partners that primarily covers the sharing of income, expenses, and property. It clarifies ownership rights and directs the distribution of the property if the relationship ends. It also provides a valuable supporting document for other legal instruments, such as deeds of title, living trusts, wills, and durable powers of attorney. For instance, in case of death, it can support your partner’s claim to jointly held property by verifying your intent to pass the property to your partner, rather than to your legal next of kin.
Some couples even use domestic partner agreements to address non-financial concerns, such as who will wash the dishes and who will trim the lawn, although courts generally provide only limited remedies for so-called personal service agreements.
Pros and Cons
A domestic partner agreement offers some important advantages. By setting clear ground rules, it can help prevent disagreements before they occur. It can also help ease the handling of disputes in the event of separation or death, possibly averting costly and emotionally draining legal battles. Despite its potential benefits, a domestic partner agreement can be a delicate subject to broach, especially if you and your partner have never held frank discussions of financial matters. Only you can decide whether a legal approach will help or hurt your relationship, and whether, on balance, the long-term advantages are worth it. If you do choose to proceed with a domestic partner agreement, bear in mind, it will require periodic updating as you continue to acquire property together.
Some relationships endure until death with no major financial differences. Other relationships end, yet the partners separate amicably. However, if your relationship ends—and you and your partner differ about who gets what—without a domestic partner
agreement you risk leaving it to a judge to divide your commingled assets and ultimately determine your financial fate. It is best to consult a qualified legal professional to prepare your domestic partner agreement or, at the least, to review it.