The Benefits Of A Domestic Partner Agreement

Domestic partner agreements address the sharing of income, expenses and property. A domestic partner agreement can be used by all unmarried couples, whether of the opposite or same sex. It is a written contract between you and your partner that is primarily used to address the sharing of income, expenses and property. It supports your ownership rights and clarifies your intentions for the distribution of your property if you die or your relationship ends. Although it is not necessary for issues that are covered by other legal instruments (such as deeds of title, wills, living trusts, durable powers of attorney for health care and finances, parental rights documents, and living wills or Declarations of Desire), it can provide a valuable supporting document for them. A written agreement declaring your intention to leave sole ownership of the property to your partner will support your partner's claim to the property. It can also bolster your will in case disapproving relatives contest it. You can also use a domestic partner agreement to identify responsibility for nonfinancial matters (e.g., who will handle household duties), although courts tend to provide only limited remedies for these so-called personal service agreements.

Domestic partner agreements provide protection you otherwise lack. Few, if any, laws specifically govern the rights and responsibilities of unmarried partners regarding the sharing of property and finances. If your relationship ends, there are no uniform guidelines for sorting commingled finances and dividing shared property. You cannot turn to a divorce court as a married couple can to effectuate property division.

Domestic partner agreements set clear ground rules up front. By setting clear ground rules, a domestic partner agreement can help your relationship run more smoothly and ease the handling of disputes in case of separation or death. Unfortunately, the issue of domestic partner rights often only comes up when a couple is separating. The rules of divorce do not apply. Still, many couples have bought property together. Children may be involved. These are issues that need to be sorted out. We can help.

At Schwam-Wilcox & Associates, we can assist with the unique matter of divorce for GLBT couples who were married out of state and are now living in Florida.

When Can You Use A Domestic Partner Agreement?

You might wish to consider a domestic partner agreement if any of the following applies:

  • You want to protect your income and property rights in case of separation or death
  • You have more than a minimum of assets
  • You expect to commingle your finances, perhaps by purchasing household goods or other property together, sharing income, or holding joint bank accounts or credit cards
  • You want your relationship to run smoothly with a clear understanding of your financial rights and responsibilities

What Does A Domestic Partner Agreement Usually Cover?

1. Shared income: What rights, if any, do you and your partner have to each other's income now — and in the future — if you separate?

Although you enter a relationship with the sole right to your personal income, a spoken or implied agreement to share the income with your partner may permit him or her to assert a claim for support against you. Without a written understanding to the contrary, you can spend a lot of time and money contesting this in court. Your right to your partner's income is especially important to clarify if you depend on your partner's income (e.g., if you're a homemaker or the parent primarily responsible for child rearing).

2. Shared expenses: How will you share household expenses — equally, according to income, or according to use? Will you share a joint bank account? If so, how much money will you keep in it, and what is it earmarked for? If you maintain separate bank accounts, what expenses will these cover?

A candid discussion of your financial values, priorities and goals will provide a solid foundation for planning your finances. Clarifying values, goals, and priorities now can ease your financial decision making and activities, including managing household expenses, deciding whether to open joint accounts and developing a budget.

3. Shared property ownership: How will you own property — separately or together?

There are four categories of property to consider:

  • Property you each individually bring into the relationship — usually, this remains the property of the partner who originally owned it.
  • Property you each individually receive during the relationship through gifts or inheritances —generally, this remains the property of the partner who received it.
  • Property without titles you acquire during the relationship, either separately or together — Possessions you purchase separately during the relationship are best kept separate, documenting your ownership with receipts in case the relationship ends. Property you acquire together is usually owned equally, or in proportion to each partner's contribution. It's especially important to document what share of jointly held property you each own. A written agreement strengthens your ownership claim if the relationship ends.
  • Property with titles you acquire during the relationship, either separately or together —Ownership of this property depends on how it is listed on the title, whether as a sole ownership, a joint tenancy with rights of survivorship (JTWROS) or a tenancy in common.

If you jointly hold property, identify what share you each own. If the ownership is not split equally, specify the terms. Outline any arrangement you have for the minority owner to equalize his or her share.

Caution: If you list your partner on a title without a fair exchange of value, the IRS could consider this a gift subject to gift tax. For more information about tax implications you would need to speak to a tax attorney or a CPA (certified public accountant) as we do not practice tax law at our firm. Describe how you'll divide jointly held property if your relationship ends. Will one of you have the right of first refusal, that is, the first right to remain in a jointly owned house and buy the other out? If so, how will you determine the value, and over what period of time will the buyout take place? Or, will you sell the property and divide the proceeds?

Domestic partner agreements require periodic updating. If you decide to proceed with a domestic partner agreement, be prepared to update it periodically as you acquire possessions together. You can attempt to incorporate new assets acquired during the relationship and how they will be split in the event that one partner dies or the relationship ends, but if it is not addressed in the agreement, you may be required to update the agreement in the future in order to protect and address all of your property/finances.

Courts generally recognize contracts between unmarried partners. Courts generally recognize contracts between unmarried partners as long as they violate no laws or public policy, are consistent with contract law and are entered into willingly. However, there are no guarantees — contracts can be contested in court. Have an attorney draft your agreement or at least review it. If there is a dispute at the end of the relationship, the matter would be in civil court, not in divorce court.

If your relationship ends, no specific guidelines exist to divide shared property and finances other than the general principles of contract law. Because you cannot turn to a divorce court or to specific statutes regarding cohabitation and domestic partner arrangements, costly and emotionally draining legal battles may ensue. Your fate will be left to a judge who must rule on your intentions and those of your partner and must determine the disposition of your shared property.

A domestic partnership agreement does not provide all the legal protection you need; therefore, it should be supplemented with other legal documents. A domestic partnership agreement primarily covers the sharing of income, expenses and property; it doesn't address the many other areas requiring protection. In order to provide more complete legal coverage, you should supplement it with the following documents:

  • Durable power of attorney for health care, also called a health care directive
  • Durable power of attorney
  • Will or living trust
  • Key documents to protect your parental rights

Taken together, the above documents, plus a domestic partner agreement, still don't provide the numerous benefits and protections conferred by legal marriage. Consult an attorney to draft these documents. They should be notarized and witnessed, and all of them can be contested in court.

If you are not interested in having a domestic partnership agreement, there are still some things you can do to prevent problems and protect your rights.

1. Own property separately. Consider owning household goods and other personal property separately. Make it a practice to keep receipts showing who owns what.

2. Clarify ownership with deeds of title. For titled property, such as a house or a car, the name(s) listed on the title determines who owns the property. Titles supersede any written documents to the contrary, including a domestic partner agreement or even a will.

3. Maintain separate finances. Keep your finances separate. Avoid holding joint bank accounts and credit cards. Either divide up the household bills or reimburse your share to each other from individual checking accounts.

If you answer YES to one or more of the statements below, a domestic partnership agreement may be right for you:

  • Are you a couple who has decided to form a long-term committed relationship, and want to solidify the relationship by outlining the responsibilities of each partner?
  • Do you want the legal and emotional security that a legal document can provide in protecting your interests should something unexpected occur?
  • Do you want a document that summarizes what will happen to you and your partner's assets and income in the unfortunate event of separation or death?
  • Do you want to reduce conflict and distress in case of a breakup by outlining both partners' wishes?

Let Us Help Today

Call 407-982-2714 or 888-337-5886, or send us an email. We are here to help.