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>>Thinking of Living Together Before Marriage? Don't Forget These!
Thinking of Living Together Before Marriage? Don't
First, let me start by saying that I
do not have a problem with couples living together
before marriage. Many couples are now living together
before they get married.
However, living together before
marriage poses legal problems that many individuals are
unaware of. I would like to emphasize “before
marriage.” If you are merely cohabitating with no
plans to get married, then this article will not be of much
help to you.
The crux of this article is about
asset protection and estate planning. Asset protection
legally protects your assets in the event of a lawsuit. While it is not bulletproof, asset protection measures can
be invaluable. However, the most common form of asset
protection, titling property as tenants by the entireties,
is available only to married couples who acquired the
property while they were married. What many newly
married couples are unaware of is that they need to acquire the
property while they are married, not beforehand. In some states, property (and financial accounts) can be
re-titled to avail couples to these legal benefits.
#1 Living in a House Together
The purchase of a home has very
significant legal implications. First of all, someone
is obliged to pay the mortgage. More importantly,
however, married couples are
able to take advantage of legal methods of asset protection
that are only afforded to legally married
couples, and it requires re-titling the house if it was
acquired before the
This asset protection is one of the most forgotten things of
newly married couples who cohabitated before marriage. There are many reasons for this, such as (1)
wedding and honeymoon celebrations, (2) lack of knowledge of
the asset protection and
(3) pure forgetfulness. If a newly married
couple lived together before
marriage, they should definitely look into how the house is
titled to avail themselves
to benefits they are entitled to by law.
Re-titling your house as tenants by the entireties
will not only help protect your
assets in the event of a lawsuit, but it will also make your
estate planning much
easier because assets passing by operation of law are
generally handled outside of
the probate process.
#2 Sharing Financial Accounts
Just as with a house, financial accounts can also be availed
to benefit from asset
protection measures. “Financial accounts” include
brokerage accounts and bank/checking accounts. Accounts such as Individual Retirement
Accounts (IRAs) and 401(k)s should not be re-titled, else
they may lose
their tax-advantaged status.
After a couple gets married, it would be prudent to review
how their financial
accounts are titled and consider re-titling the accounts if
the situation warrants it. This is one of
the reasons I am against do-it-yourself law because there
more considerations that must be accounted for.
#3 Estate Planning Documents
It is estimated that about half of the American adult
population does not have any estate planning in
place. Estate planning documents include wills, powers
living wills and possibly trusts. If you had estate
before you were married, they need to be updated. If
you did not have any estate
planning in place, then you and your spouse should seriously
consider starting now!
This is the only paragraph where I will mention the pitfalls
of do-it-yourself law. There
are many considerations that one must account for when
planning an estate such as tax
implications, legal requirements and proper document
forms, software and various internet resources are not the
best place to turn to because what you see
is what you get, there is no customization. Now think
about your five closest friends –
are their life circumstances exactly the same as yours to
warrant using the same estate plans?
Life-changing events require updating your estate planning
documents. Generally, (1) marriage, (2) death, (3)
divorce and (4) birth, at a minimum, require updating
your estate plan. Many people are under the mistaken
impression that wills and
trusts are only for handling wealth, which is incorrect. Wills also have the very
important task of delegating a guardian for minor children
(a trust cannot appoint a
guardian, so even if you have a trust, you still need a
Click here to download a PDF of this article.
This article is being provided for informational purposes
only. You should consult with an attorney before
re-titling any of your assets. Not all states
recognize tenancy by the entireties.