For a variety of reasons, more and more couples are living together either before they get married or because they choose not to get married. But living together, without the legal protections of marriage requires couples to take a few steps to ensure that they are prepared in case the relationship does not last, specifically when it comes to dividing property.
While making a big purchase, such as a house or car, it is important to decide how the property will be held by the couple. Generally, there are two main ways that an unmarried couple can choose to share ownership in property:
- Joint Tenancy – provides the couple with equal ownership of the property. Designating property as being owned in joint tenancy is easy and only requires a short notation on the title of the property. If the couple should split, the property will be split 50/50.
- Tenancy-In-Common – allows both persons in the couple to have a distinct ownership in the property. As such, ownership rights can be set out by the couple to be 50/50, 25/75, or any other division of ownership interest that the couple chooses. Upon separation, the property will be split according to the set ownership interest.
The biggest distinction between these two types of ownership interest is how survivorship is treated upon the death of one of the owners. In a joint tenancy, the deceased partner’s ownership is transferred to the other partner automatically. However, in a tenancy-in-common, since ownership is distinct, a partner is able to pass along his or her ownership interest to his or her heirs or to any other person via a will or trust.
Even if you are happily committed to your partner, it is important to plan for the unforeseen, even if the unforeseen never arrives. There are other ways to determine how property will be split, including through agreement, that a couple should also explore. Speak with an experienced attorney to explore all of your options concerning property division and to decide which option is right for you and your partner.