Cohabitating before, or in lieu of, marriage has become increasingly popular in the United States. According to the Pew Research Center, marriage rates have steadily declined in recent decades with about 20 million unmarried American couples currently living together. If you choose to postpone or forego marriage, yet live with a boyfriend or girlfriend, it is wise to take steps to protect yourself and your partner to avoid disputes that could lead to litigation down the road.
What Legal Options Are Available to Protect Cohabitating Couples?
Various legal tools and strategies can be used to protect the interests of cohabitating couples; however, the most used tools are a revocable living trust or a Limited Liability Company (LLC).
If the property where you will reside is your “homestead” property for tax purposes, a revocable living trust is usually the best option. A living trust is a legal arrangement that allows a Trustee, appointed by the trust creator, to hold the property for the benefit of a third party. Making a trust revocable allows the creator (“Settlor”) to terminate or make changes to the trust at any time. You can appoint yourself as the Trustee or appoint yourself and your boyfriend/girlfriend as Co-Trustees. The terms of the trust are used to determine what rights each party has in the event of the death or incapacity of the other party as well as how assets, including equity in the property, will be allocated if there is a breakup down the road
If the home does not qualify for your homestead exemption, creating an LLC is an excellent option. Because the homestead exemption provides significant tax benefits, this option is typically only considered when a couple is residing in a home that is not a designated homestead. An LLC is a hybrid legal entity that combines the benefits of both a partnership and a corporation. The Operating Agreement (OA) drafted when you create an LLC can be used to determine the rights and responsibilities of each party regarding the property on a daily basis. The OA can also specify what happens in the event of the death or incapacity of one party as well as what happens if the LLC terminates.
Speak to an Experienced Georgia Estate Planning Attorney Today
To ensure the financial interest of both parties is protected and to avoid the potential for costly disputes, be sure to work closely with an experienced attorney when you decide to move in with a boyfriend or girlfriend. Contact an experienced Georgia estate planning attorney to discuss how we can help you by calling 678-784-4150.