Before Saying “I Do”—
Whether Getting Married or Just Residing Together
Before moving in with someone, whether you are getting married or not, it is important that you both are protected from any financial or health mishap. If you are sharing the cost of living expenses, what if the other of you gets too sick to handle finances? How will you get the other half of the bills paid unless there is a power of attorney?
Being married does not give spouses access to all of each others' financial accounts. Qualified retirement accounts and real estate cannot be accessed or sold simply because you are married or joint tenants on property. Bills cannot be negotiated, particularly medical bills, without a financial power of attorney or health care power of attorney.
Premarital Agreements can address these sorts of objectives. Premarital Agreements are NOT duplicitous, horrible documents. In fact, once a couple realizes how helpful Premarital Agreements can be in making couples feel comfortable being married, the agreement is often fairly simple to prepare.
If you are not getting married, then you are what is termed as "Domestic Partners." "Domestic Partners" is a term used today to refer to people who live together but who are not married. Today, many times, older adults like to live with a brother or a sister, and they would be considered Domestic Partners. Domestic Partners also include same sex couples or non-married, heterosexual couples. Domestic Partners are about as common as married couples.
Domestic Partners usually are very close to each other, know the wishes of the other and are the best providers. However, under the law, they are legal strangers, without any rights regarding the other. This can cause a variety of problems which can be addressed by a Domestic Partnership Agreement.
The helpful aspects of a Premarital Agreement or a Domestic Partnership Agreement include: determining how the income of each person will be used - shared or kept separate; deciding whether the income or appreciation of assets will be held either in shared ownership or kept separate; and assuring that each person can independently choose his or her type and duration of employment during the relationship.
Many times a person wants his or her life partner to leave employment or change employment, because of travel demands or health considerations. If the potential issue of financial support is addressed at the beginning of a relationship, the person leaving employment will likely feel less anxiety about the decision.
When both of the couple are business owners, these agreements can protect each others' assets from a down-turn in the other's business. That is, each person's assets can be insulated from the other's business creditors, thereby making sure that half the couple’s assets remains intact.
Often couples have children from a prior marriage. The couple can put together an inheritance scheme, including wills and trusts, which protects the children. As a result, the children do not need to feel threatened by the marriage or living arrangement. As a result, there can be more comfortable family arrangements.
Along with this sort of agreement, persons living together should also have health care power of attorney which can also include powers for mental health care, in case one suffers from dementia or mental illness. You do not have to list your spouse or Domestic Partners, just someone your spouse or domestic partner can contact and work with if you are ill or incapacitated.
Agents can be appointed for finances under a Durable Power of Attorney. The financial agent can access bank accounts and make withdrawals from IRAs for the benefit of the other. The Durable Power of Attorney allows the Domestic Partner to collect debts, run a business, sell real estate or contract for services, such as in home care assistance. It is "durable" because it remains effective even if the one who created it becomes incapacitated.
Spouses or Domestic Partners can execute mutual Wills or a joint Revocable Living Trust. These set out the desires for how assets should be used after death. That is, whether the surviving Domestic Partner should have all of the remaining assets or whether some should be saved for other family members.
The enforceability of these agreements are based on two factors (1) that each party is aware that they can seek separate legal counsel; and (2) full disclosure of financial resources. Either or both of the couple can waive counsel, once they both understand that they are entitled to independent counsel.
As for financial disclosure, a person cannot agree to allocations of sole and separate property if the person does not know what he or she is giving up. If assets are not disclosed completely, the courts will be reluctant to enforce a Premarital Agreement or Domestic Partnership Agreement. Court involvement can be avoided by including provisions for mediation or arbitration.
If a couple gets married and later realizes that a Premarital Agreement would have been helpful, it is not too late. A Postnuptial Agreement can achieve much, if not all, of the same goals.
These agreements can be negotiated like any other agreement. The parties and their counsel need only recognize that they are seeking to create a livable contract, not tear apart a relationship.
Therefore, with a well prepared deed, the court process of probate can be avoided. As a result, legal fees can be limited or avoided all together.