Cohabitating with your boyfriend or girlfriend before, or in lieu of, marriage has become increasingly popular.
If you postpone or skip marriage but share a home with your partner, you should take legal steps to protect yourself. Clear agreements can prevent misunderstandings and reduce the risk of expensive disputes.
What Legal Options Are Available to Protect Cohabitating Couples?
Various legal tools and strategies can protect your interests if you move in with a boyfriend or girlfriend. The most commonly used tools in Georgia are a revocable living trust and a limited liability company (LLC).
Revocable Living Trust
If the property is your “homestead” property for tax purposes, a revocable living trust is usually the best option. (More on that below.)
A living trust is a legal arrangement that allows a trustee to hold the property for the benefit of a beneficiary. You can appoint yourself as the trustee and the beneficiary for your lifetime.
Making a trust revocable allows the creator to terminate or change it at any time. The trust terms determine each party’s rights if the other party passes away or becomes incapacitated and how assets (including equity in the property) will be allocated.
Limited Liability Company (“LLC”)
If the home doesn’t qualify for the homestead exemption (i.e., it is not your primary residence), creating an LLC is an excellent option.
A Georgia property owned by an LLC won’t qualify for the homestead exemption. Because the homestead exemption provides significant tax benefits, we’ve found that our Georgia clients typically only opt for an LLC if the property isn’t their designated homestead.
An LLC is a hybrid legal entity that combines the benefits of a partnership and a corporation.
An operating agreement governs how an LLC operates. It defines each party’s rights and responsibilities regarding the property and outlines what happens if one party passes away or becomes incapacitated.
For example, an operating agreement can address the following:
- What are each of your rights and responsibilities?
- Who pays for the mortgage payments, property taxes, and maintenance?
- What happens if one of you becomes incapacitated?
- What happens to the property if one of you passes away?
- What happens if one of you wants to sell the property?
- What happens if you break up?
These are just a few issues that an operating agreement should cover. A well-drafted agreement ensures clarity, protects your financial interests, and helps prevent costly legal disputes.
Speak to an Experienced Georgia Estate Planning Attorney Today
If you live in Georgia and move in with a boyfriend or girlfriend, safeguard your assets and prevent issues down the road by working with an experienced estate planning attorney.
Contact an experienced Georgia estate planning attorney to discuss how we can help you by calling 678-882-0830.
