The Risky Business of Living Outside the (Marriage) Box

It’s not just your parents—your state wants to see you settled down and married. 

State laws incentivize marriage and offer hundreds of statutes that confer protection on married persons ranging from spousal support after separation, property rights (and other laws that presume property acquired during marriage is a joint asset)  to tax perks such as the exclusion of gift taxes for transfers between partners and protection from disinheritance upon death.  Thanks to a California case and the recent United States Supreme Court Decision, San Francisco values have gone mainstream, and now same-sex couples nationwide have similar incentives (or pressures, depending on who you ask) to formally and legally get married.

Marriage Rates are Decreasing

As our matrimonial laws continue to expand, fewer and fewer people are stepping up to the altar. By 2014 the share of married Americans dropped to 50%, down from 69% in 1970. Since 2000, unmarried cohabitating couples have grown by over 40% in the United States and over 40% of our children are born to unmarried couples. Despite the ‘diamonds are forever’ marketing, the U.S. has the highest divorce rate in the Western world and statistics show that after a year and a half of cohabitating, fully half of cohabitating couples have either married or broken up.

The standard marriage model is not user-friendly to millennials, almost half of whom support an “opt-out” model involving a two-year trial run—at which point the union is formalized or terminated, without any paperwork.

Americans are not growing afraid of commitment. Instead, millennials understand their relationships are not like their parents’. And they don’t have to be. In 1976 the California Supreme Court suggested, “Some couples may wish to avoid the permanent commitment that marriage implies, yet be willing to share equally any property acquired during the relationship.” Millennials avoid marriage not to avoid commitment. Instead they are avoiding a multi-thousand, multi-year Divorce Inc. institution. No longer taboo, the rate of unmarried romantic (and committed) cohabitation has increased 1,000% over the past decade. Generations reared by choice and options are ‘disrupting’ how stable relationships are formalized.

Living Outside the Law

Cohabitation comes with dangerously little protection. While married couples unknowingly enter into a complicated economic contract based on legislative algorithms for what’s fair, cohabitants face the other extreme. If two people buy dishes, pick out sofas, and commingle their resources — upon separation they are largely treated as familial strangers. There are no duties and presumptions for cohabitants, and there will be no reimbursement for mortgage contributions made towards your ex-roommate’s home. California and many other states do not have any form of “common law” marriage, so unmarried couples who separate after living together and ‘acting’ married have to be much more creative, and potentially employ financial planners, trusted friends, and mediators to help sort out finances.

The solution: an individually tailored cohabitation agreement. 

The alternative is walking away with nothing, mediation, or an archaic and expensive civil litigation system that treats unmarried exes as business or real estate partners (at best). A landmark California Supreme Court case, where the judge acknowledged couples shirking commitment, opened the door for romantic cohabitants to seek spousal support and property division in non-marital break-ups. After six years of living together, Ms. Marvin (a Hollywood C-lister) changed her surname, gave up rising fame to be a homemaker (no kids), and thought Mr. Marvin (an Academy award winning villain) orally promised to support and share his earnings. After their break up got to the state’s highest court, Ms. Marvin was unable to prove the existence of a contract which entitled her to a division of property (which would have been deemed community had she been married). The privileges of married people were not transferrable to those who choose not to marry. But the Court invited future cohabitants to prove the existence of an express or implied contract to get what Ms. Marvin could not.

A cohabitation agreement guards against the unknown – it can solidify expectations, provide protection to a partner who sacrifices career to tend to children, protect separately owned property, provide scaffolding for jointly owned property, provide for support (‘palimony’) post separation, and/or minimize financial exposure to the higher earner. This clarity (and express confirmation) would have helped Ms. Marvin determine:

  • How will income and expenses be allocated in your relationship?
  • Will you pool assets and wages?
  • Will both parties be responsible for paying bills equally or proportionally?
  • Will property acquired during the relationship (think: stock options, cars, loans, retirement contributions, houses, etc.) become joint or stay separate?
  • Will palimony (post non-marital break-up support) be paid or received?
  • If one party sacrifices economic growth to raise children or support the other’s career, will s/he be entitled to financial assistance or a break-up transition payment to become self-supporting?
  • If a house is purchased during the relationship, how will title be held and how will the parties build their respective financial interest in the real property?

As goes California, so goes the nation—but California is not going anywhere. When it comes to cohabitation, California is following along. The state is constitutionally bound to recognize an out-of-state common law marriage, but fewer and fewer states are allowing it. Six states recently abolished it (most recently Alabama in 2017). One national outlier is Washington State, where cohabitants have similar property rights as marital partners. In those few states where common law marriages are legal, there is no such thing as a ‘common law divorce.’ Couples still will have to convince a judge that medical records, sleeping arrangements, and holiday cards sufficiently prove a ‘marriage’ existed and equitable division of property is warranted.  Small and intimate details of a couple’s life will make their way into the public pleading file.  Often times, the economically disadvantaged spouse will argue for a marriage, and the higher earner will claim no partnership existed at all (just like our California cohabitation anti-hero Mr. Marvin).

Proving a Marvin relationship is an uphill battle because courts like clean rules. Unlike divorces where separating couples must initiate a legal process to disentangle their finances, unmarried cohabitants do not have the benefit of a code specifically tailored to (almost) all issues that come up when dissolving their union and/or a dedicated forum to resolve them in.  Providing your implied contractual intentions (one way to show a

Attempts to innovate the marriage model have not been successful. In 2011 a Mexico City legislator proposed a two-year temporary beta marriage. Religious leaders, battling a simultaneous attack on “traditional values” from marriage equality advocates, protested the proposal. In June 2017 the United Kingdom’s President of the Supreme Court Lord Neuberger delivered a keynote speech on the “plight of the unmarried.” Across the pond, the U.K. Supreme Court effectively killed off the possibility of property rights for domestic purposes.

Californians wanting the rights of married people must get married. Or, in the alternative, a carefully crafted cohabitation agreement with experienced lawyers to not only memorialize expectations, but provide for a method of resolution for disputes that arise post separation. At some point, the Family Law community will need to look long and hard as to whether it makes sense to expand the Family Code to include more rights and obligations for romantic cohabitants or, at the very least, provide a more streamlined method for resolving the implied and express contract disputes that sometimes arise.