Unmarried couples and their property, or,
Who gets the pots and pans?
CP
A
If income or assets are large, thoughtful planning is needed
before intermingling property ownership on a scale
larger than toothpaste or the cookware set.
petty had been taken jointly. The party who had
made the pay ments on a new truck had transferr
ed its title to the other. When the relationship
SOTE: So two legal situations are the same.
unexpectedly ended, one of the partners wanted
This column discusses only general legal
"settlement money” to release his interest in
principles. For specific advice, consult a
the real property and the truck. The question of
qualified attorney.
title to the vehicle was critical, since one of the
hen a married couple divorces or legally
parties (the one w ithout title) had guaranteed the
separates, the law provides that their
payments and was liable to the lender, even
property — real property, personal property and though he did not have title to the vehicle and
marital debts — be divided ' equitably”
could not sell it to pay off the loan. Planning
between the couple, with due regard for the
could have avoided these problems.
The key to a court division of the joint pro
perty of an unmarried couple is the intent of the
parties at the time they entered into the relation
ship. Did they intend to pool all of their re
sources? Was one person going to pay every
various factors that will assure that "equity” is
thing? To make this determination, courts will
accomplished. The law also will assist unmar
look at the facts of the situation: did one party
ried (yes. even gay) couples in dividing'their
pay for everything; were there written agree
property and debts if the parties are unable to
ments; were there oral agreements; how was
agree on how to do so. However, the goal of the
particular property treated by the couple? It can
court is not to create “ equity,” but rather to
become tricky to sort out who intended what,
enforce what the court finds to be the intent of
especially if the parties never gave it much
the parties. This rule has many practical conse
thought, much less expressed their intentions in
quences for unmarried couples, some of which
writing.
are discussed below.
Real property
Questions may arise as to property that each
Several months ago, I wrote about the Ore
party brought into the relationship, or as to
gon case Ireland v. Flannigan in which a same-
property acquired jointly, or individually, dur
sex couple went to court to determine their
ing the relationship. Also, debts of the relation
respective interests in the house which they had
ship can sometimes be considered. I once was
bought together. Title had been placed in the
called upon to untangle the property rights of a
name of only one of the women, although each
former couple in which title to their real pro-
had contributed to the down-payment. Each
party had a different explanation as to why title
was placed only in one name, so the judge
found that each of the parties was an unreliable
w itness whose testimony would need cor
roboration in order to be believable. The court
considered all of the factors in the relationship
and the testimony of one party that, at the time
of purchasing the property, they intended to
pool all of their resources and have "a mar
riage.” Therefore, the court found that the
parties intended to share equally in ownership
of the real property, and. accordingly, that the
one partner whose name did not appear any-
where on the property had a half interst in it.
Because real property is often the largest
investment that most individuals make, particu
lar thought and care must be given to a property
transaction involving two or more unmarried
individuals. Although it is possible that luck and
chance will protect your intentions, it is more
likely that qualified legal advice will do so.
perty held in this manner passes outside your
will or probate. Instead, it would vest directly in
your lover if he or she survives you. There are
also other ways in which real property can be
held by two or more persons. One should
always obtain professional advice when taking
title to real property.
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Just Out • 32 • January 1988
E. Ann Hinds
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771-0045
626-6920
Gifts
There may be unintended consequences to
acts of generosity that are unaccompanied by
careful thought and planning. Between married
spouses, and between parents and their children,
the law presumes that transfers of property are
gifts. This is not so between unmarried persons,
including those who have a long-term relation
ship Rather, the party seeking to establish the
existence of a gift has the burden of proving that
it is actually a gift, and must do so with "clear
evidence." There may be tax consequences if
the value of the gifts any one year to any one
person is greater than $10.000. Large gifts
(those approaching or exceeding $10.000 in
value) should be well documented. You should
check the tax consequences of such major gifts
with your tax accountant
Real property
In Oregon, unmarried persons cannot own
real property jointly. (Only a husband and wife
can do so.) However, a particular form of own
ership. similar to joint ownership, is the so-
called "survivorship estate.” In general, pro
Bank accounts
Many practical problems are encountered in
dividing an unmarried couple’s joint bank
accounts. Even though bank signature cards
usually contain language purporting to state the
rights of the parties to the account, these signa
ture cards are not binding on the courts. Often
the court will trace the money put into the
account and taken out of it, and will try to reach
a division that reflects the intent of the parties.
If you maintain only joint checking accounts,
be certain to keep a record of your earnings, and
of deposits to the account and funds spent
from it.
Planning for relationships
It can be difficult to discuss economic mat
ters when you are busy falling in love. You
might think it to be in bad taste to do so. In my
experience, it is not bad taste but, rather, good
judgment for a person to consider the effect of a
relationship on their assets and estate. If you
bring up the subject and your prospective part
ner becomes angry or is unwilling to make an
agreement, then you may wish to reconsider the
emotional and economic maturity with which
your partner approaches your relationship.
The safest way to protect your expectations
about individual and joint property is to put
them into a written agreement signed by each of
the parties to the relationship. Such "living-
together agreements” are valid and usually are
enforced by the courts. If a couple is not sure
that it wants all of its economic affairs to be
intermingled, other terms can be incorporated
into the agreement. Your attorney can help you
prepare a living-together agreement.
If you are bringing your individual property
into the relationship, and also intend to take it
with you if the relationship ends, you may wish
to identify specifically those items of property
that are "yours.” When property is acquired
during the relationship, special thought should
be given to in whom title is placed, with whose
funds the purchase is made, and whose names
appear on the loan, if there is one. How the
couple treats particular items of property also
may be considered by the court. If particular
property is “ yours,” then be sure to treat it as
yours.
Finally, a will can be a useful means for an
unmarried person to assure that all or most of
his property will go to his chosen companion
rather than pass by law to his surviving blood
relatives. Be sure to consult an attorney to pre
pare your will.
The need for property planning in an unmar
ried relationship is greater when the parties'
affairs are substantial. If your income or assets
are large, thoughtful planning is needed before
intermingling property ownership on a scale
larger than toothpaste or the cookware set.
Although lawyers are trained to be paranoid, a
legal consultation before you give a lover title to
some of your property may well be in order. If
you acquire a substantial asset during the term
of a relationship, legal advice may also help to
protect your intention with respect to that
asset.
•
The author is a lawyer in private practice. He
maintains offices in the Oregon Trail Building
in downtown Portland.