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Protecting your individual and property rights: when you decide to live with someone

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Disclaimer: This information should not be substituted for legal advice.  It’s important that if you are considering creating any of these agreements that you see a lawyer who can craft a document honoring your commitment to each other but looking at your unique needs and circumstances.  All of these agreement can be complicated and an experienced lawyer can help you understand your rights and how to protect your interests.  If you’ve signed one of these agreements or are considering signing one, take the time to talk to a lawyer to make sure it is accomplishing what you think it is.

The divorce rate in the United States has been dropping for years, largely due to the fact that people are marrying later in life and possibly because fewer Americans are taking the plunge according to economist Justin Wolfers.  Still the realities of modern life have made legal agreements between the two parties an acceptable part of modern life.  Unmarried and married couples may enter into legal agreements with each other to define their legal rights, privileges and obligations toward matters such as children, property, businesses and other concerns.

Prenuptial Agreements

Prenuptial agreements define the division of assets in case a marriage ends.  For older adults heading into a mature marriage (one in which both adults are likely to have sizable assets and/or sizable liabilities, a prenuptial agreement can also address estate planning issues, responsibility for debt, asset management and even protection from law suits if one or the other partner is in a profession with a high likelihood of lawsuit such as a physician.

Most often, people think of prenuptial agreements as covering the parties when they divorce but in marriages between older couples the intention may simply be to pass assets to children from a prior marriage because while divorce could be painful, the other way for a marriage to end is through death.  Either ending can result in the surviving spouse claiming up to half of the assets.

A spouse may honor the deceased’s spouse’s wishes but isn’t legally compelled to do so.  A prenuptial agreement provides a legal way to allow the marrying couple to create their own division of assets.  This can be important for a variety of reasons including if one spouse has a family business or property that he or she wants to keep in the family.

Postnuptial Agreement

As you might guess, if a prenuptial agreement occurs before the marriage, a postnuptial agreement occurs during the marriage.  Postnuptial agreements are also called property status agreements.  This type of agreement secures the property rights of one or both of the spouses by clarifying and defining the property interests of the parties in the event of death, divorce or separation.  It can also be used to amend a prenuptial agreement.

Cohabitation Agreement

Cohabitation has increased by almost 900 percent over the last 50 years according to Arielle Kuperberg, an assistant professor of sociology at the University of North Carolina at Greensboro.  Two-thirds of new marriages take place between couples who have been together almost three years.  Cohabitation agreements require that the individuals be in a committed intimate relationship and show that they are in a stable, marital-like relationship but know they are not lawfully married.  The problem is that when cohabitation breaks down, there is often little protection for the weaker partner particularly when children are involved.  To avoid misunderstandings between the couple a cohabitation agreement sets down who owns what and in what proportion then documents how property and other assets will be divided should the couple separate.  Cohabitation doesn’t allow a couple to have all the legal rights and responsibilities of a marriage but it does more clearly define how assets will be distributed and used upon separation or death.   The factors relevant for establishing a relationship between two parties that could create property interests include, but are not limited to, the following: (i) continuous cohabitation; (ii) duration of the relationship; (iii) purpose of the relationship; (iv) pooling of resources and services for joint projects; and (v) the intent of the parties.

Community Property Agreements

Washington is a community property state so anything acquired by either spouse during the course of their marriage is presumed to be community property whereas property owned previous to the marriage or acquired during marriage by gift or inheritance are considered separate property.  If both spouses desire that the survivor become the owner of that separate property they can sign a community property agreement so that the death of the first spouse causes the property to automatically pass to the surviving spouse.  The community property agreement prevents the need for probate or a living trust to transfer the property.  But, they can have unintended consequences.  Many people have gone to the stationary store or to places like LegalZoom and purchased a community property agreement only to find out later that such a move requires time and money to fix.

Contact a lawyer with Johnson & Nagaich if you have questions about any of these agreements and whether or not one of them might be right for your situation.


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