The Journal of The DuPage County Bar Association

Back Issues > Vol. 20 (2007-08)

Cohabitation: What to Do When Couples Cannot or Do Not Marry
by  Elizabeth A. Pope

Cohabitation is the fastest-growing living arrangement in the United States. Popular attitudes toward cohabitation changed significantly between 1960 and 2007, which has laid the groundwork for today’s changing sense of coupledom. These changing attitudes include the decrease in the stigma associated with cohabitation, and its institutionalization as an alternative to marriage and singlehood.1 With more couples than ever choosing to cohabitate, what should an attorney know regarding their legal rights?

Every family law attorney should be prepared for the couple who walks through the door, seeking to avoid, or simply unable to enter into marriage. With more people choosing to not enter (or reenter) into marriage, cohabiting (whether heterosexual or homosexual) is no longer an unusual event. Many couples are now choosing to live together as an alternative to marriage. Whether the agreement is referred to as the "UK" (unmarried contract), pre-partnership agreement, domestic partnership agreement, pre-union agreement, living-together agreement, or cohabitation agreement, it is the attorney’s duty to provide some measure of certainty for his or her client. A cohabitation agreement is a private contractual alternative to marriage for two people who have integrated their residence, property, and daily lives. A cohabitation agreement is a private contract between cohabitants that tries to establish the same type of rights and obligations that married people obtain by custom, statute, and agreement.2

Cohabitation agreements can address any issue that arises during cohabitation or separation, except for issues of custody, child support, or access to children. Courts recognize contracts between two people, as long as sex is not a provision. Additionally, since common law marriages are not recognized in Illinois, cohabitation alone can never result in a valid marriage.3 Cohabitation can be defined as a relationship involving a heterosexual or homosexual couple who live in the same household and who mutually assume those rights, duties, and obligations that are typically manifested by a married couple, including sexual relations. While a cohabitation relationship may resemble a marriage, it does not legally qualify as a ceremonial, common law, or putative marriage. Hence, a cohabitant is legally single.4

Cohabitation Scenarios. For lawyers specializing in family law, real estate, or estate planning, imagine a prospective client who states that they are going to live together and own property, without marrying, but would like some security nonetheless. What security could be offered? Would it last only until the relationship ceases to be? How enforceable would this security be if one person loses a job, becomes ill, dies, or brings in children from a prior relationship? What legal actions will the people have to take? What rights do they have? Unmarried couples living together long-term do not have the same legal rights or protections as married couples, who are covered by a multitude of Illinois statutes. People living together need to address finances, health care, property rights, inheritance and estate planning issues. Detangling the strands of a frayed relationship are often more complicated than dividing a marital estate.

It is likely that at least one of these situations is going to present itself to the attorney. When a client walks into the attorney’s office, or a friend or relative inquires of an attorney regarding this issue, how will an attorney respond? What alternatives or legal advice might an attorney suggest?

Possible Marriage – The Premarital Agreement. Living together is often a starting point toward marriage. A cohabitation agreement may be appropriate for this scenario, although some may incorrectly think that the cohabitation agreement can serve as a premarital agreement. A cohabitation agreement could certainly be used as a reference, but cannot be simply re-branded as a premarital agreement because the General Assembly has specifically enacted legislation regarding the content and enforceability of premarital agreements.5

Cohabitation agreements are generally governed by contract principles. After a marriage, a cohabitation agreement will not have the same force and effect as a premarital agreement.6 Few states have adopted laws dealing with cohabitation agreements. A premarital agreement goes into effect only upon marriage, and a cohabitation agreement is not usually valid once the parties marry. Whether they have agreed to marry, or if they aren’t married now but marry in the future, the client should have a cohabitation agreement.

Same-Sex Partners. For same-sex partners, living together is the only option available under current Illinois law. Although the city of Chicago and Cook County extend benefits to domestic partners, and the city of Oak Park extends benefits to domestic partners and provides a domestic partner registry, same-sex marriage partners are not recognized by law in the State of Illinois.7 Unmarried cohabitants should check with the state and local laws in their jurisdictions to determine what rights may be available to them.

Heterosexual Partners, Divorced and With Children. When a heterosexual couple includes one or both parties with a prior divorce, one or both parties with children from prior relationships, or one or both parties do not want to get married/remarry, living together can be a convenient arrangement. The person and the partner with whom they intend to live may have children from previous relationships and may have acquired assets prior to meeting each other. The attorney can guide the client regarding both previously-acquired assets and assets acquired after the parties begin living together. The agreement can designate which assets the client intends to retain should the relationship end. The agreement also can set forth how to contribute to expenses during the relationship and divide the assets acquired during the relationship. The ideal arrangement, though not the most affordable, is for each partner to be advised by separate attorneys, who can negotiate and draft an agreement that will be enforceable in their jurisdiction. An attorney is more likely to address all issues that need to be covered by the agreement and can avoid the pitfalls that may result in the agreement becoming unenforceable. Also, each party having their own attorney can avoid or minimize later claims of duress or unfairness or fraud.

Elderly Couples. Living together is an increasingly popular option for older individuals who don’t want to upset family or friends through remarriage. Elderly or widowed couples who have lots of assets, trusts, grown kids, family businesses, or health issues have more to protect and more issues to address in the context of an agreement. Living together may also be an attractive option for elderly clients in that it won’t affect taxes, social security, pension benefits, or health insurance. Older people generally have already raised a family; having a cohabitation agreement can provide some security & control through defined terms. In this way, one partner will not feel taken advantage of by the other, thereby reducing any misunderstandings between the parties and reducing the stress of family members regarding succession issues if a death or separation occurs.

History and Case Law on Cohabitating Persons. In 1976, the California Supreme court rendered a landmark decision in Marvin v. Marvin,8 where the concept of "palimony" was created (i.e. support payments for unmarried cohabitants who split up. Actor Lee Marvin was romantically involved with a woman named Michelle Triola for many years, until the relationship came to an end. In a media-charged case, Ms. Triola sued Mr. Marvin for support based upon an agreement they had to pool all that they had. The California Supreme Court specifically held:

In summary, we base our opinion on the principle that adults who voluntarily live together and engage in sexual relations are nonetheless as competent as any other person to contract respecting their earnings and property rights. Of course, they cannot lawfully contract to pay for the performance of sexual services, for such a contract is in essence, an agreement for prostitution and unlawful for that reason. But they may agree to pool their earnings and to hold all property acquired during the relationship in accord with the law governing community property; conversely they may agree that each partner’s earnings and the property acquired from those earnings remains the separate property of the earning partner. So long as the agreement does not rest upon illicit meretricious consideration, the parties may order their economic affairs as they choose, and no policy precludes the courts from enforcing such agreements.9

In 1978, the Supreme Court of Oregon noted in Beal v. Beal10 that Courts have been reluctant to grant relief of any kind to a party who was involved in what was termed a ‘meretricious’ relationship. The Court took the position that the parties had entered into a relationship outside the bounds of law and that the courts would not allow themselves to be used to solve the property disputes evolving from that relationship.11 Other state courts have touched on cohabitation: Ordinary contract principles are not suspended, however, for unmarried persons living together, whether or not they engage in sexual activity.12 The Catalano Court went on to conclude that Connecticut’s public policy does not prevent the enforcement of agreements regarding property rights between unmarried cohabitants in a sexual relationship.13

Illinois Courts have also addressed the issues surrounding unmarried cohabitation. In Hewitt v. Hewitt,14 the Illinois Supreme Court held that an unmarried cohabitant’s claims were unenforceable because they "contravened the public policy implicit in the Illinois Marriage and Dissolution of Marriage Act, which disfavors the grant of mutually enforceable property rights to knowingly unmarried cohabitants."15 The Supreme Court held that it would not grant mutual property rights to unmarried cohabitants because to do so would reinstate common-law marriage and violate the public policy of Illinois. However, it also recognized "that cohabitation by parties may not prevent them from forming valid contracts about independent matters, for which it is said the sexual relations do not form part of the consideration."16

In Jimenez v. Jimenez,17 the Court opined that one factor to be considered by the court in a divorce is the contribution of each party to the acquisition of non marital property, a term which includes property acquired before the marriage, and that "harmonious with Hewitt... that people who live together as man and wife without the benefit of legal marriage may still be bound by express or implied contracts between themselves relating to their acquisition of property.18

In Ayala v. Fox,19 the Court reiterated that Hewitt stood for the proposition that property disputes between persons who lived together without the benefit of marriage are not going to be recognized by the Court and held that due to the parties cohabitation, Hewitt barred plaintiff’s claims, and affirmed the trial court’s dismissal of the plaintiff’s claims.20 In Kaiser v. Fleming,21 the Court held that "equity and good conscience" entitled Kaiser to her share of the money invested in her boyfriend’s home. The Court distinguished Ayala and reasoned that Kaiser’s investment was "substantially independent" of her relationship with Fleming, and classified the payment toward his mortgage as an investment.22 Lastly, in Costa v. Oliven,23 the Court reiterated Hewitt - unmarried cohabitants acquire no interest in the property of their partners solely by virtue of their cohabitation, and that the General Assembly, not the courts, is vested with the power to change this.24

Writing the Agreement. It is particularly helpful for the attorney to have a sample checklist and sample of clauses of all matters to be considered in drafting the cohabitation agreement. The parties to the agreement should be referred to as "unmarried cohabitants." The Agreement itself falls within the purview of the common law statute of frauds, wherein the contract should be in writing. The parties must also meet all of the basic contract requirements: be of legal age; competent to contract; and possess sufficient consideration. While in premarital agreements the marriage is the consideration, in cohabitation agreements, sex cannot be the consideration or be referred to in any way. The agreement must be entered into freely and voluntarily, must be free from fraud or duress, and must contain full and fair disclosure of each party’s assets and liabilities. The parties should consider referencing or attaching promissory notes, security agreements, and wills in the agreement. The attorney must make sure to ask the client what his or her expectations are of the relationship and the contingencies should the relationship cease to be.

Not all states recognize cohabitation agreements, but most do recognize written contracts that comport with public policy. Attorneys must review the laws of their state before drafting a cohabitation agreement.

As with premarital agreements25, each party should fully disclose all of their assets and liabilities and exchange documents with each other. It is advisable to have clients complete a financial affidavit, similar to the Comprehensive Financial Statement used in domestic relations proceedings.26 Further, the agreement should contain the following clauses:

• Property rights - which property will be jointly owned, which property remains separate, dealing with gifts of property to couple;

• Residence – who owns and the effect of joint payment of expenses, utilities, living expenses, etc.;

• Ownership and division of pensions & retirement plans;

• Responsibility for debts - proportional contributions; separate bank accounts and credit cards

• Support payments – though Illinois does not recognize this concept, the parties can contract regarding percentage of allocation of jointly held property;

• Children – support obligations, legal names of the children (custody and visitation cannot be made by cohabitation agreement);

• Wills and inheritance rights – who inherits what, who will be the executor, health care power of attorney and living wills, beneficiaries of life insurance policies, tax consequences (inter-vivos transfers between unmarried cohabitants are subject to gift tax and testamentary gifts are subject to estate tax; significant tax liability can result from property transfers from one unmarried cohabitant to the other, if there is no consideration);

• Mediation or process for negotiating future changes or settling disputes;

• Attorneys’ fees and costs.

Enforceability of Agreements. The causes of action used by unmarried cohabitants to enforce an agreement have historically been the equitable doctrines of unjust enrichment and quantum meruit, but creative attorneys also use partition actions, which can be arduous and fact-intensive, to extricate the parties from property issues. Absent a written cohabitation agreement, oral agreements relied upon by the cohabitants result in the filing of these kinds of actions. Some states are willing to enforce an express oral or written contract dividing property acquired during cohabitation, so long as the contract is severable from sexual relations between the parties.27 In addition to express oral agreements, implied agreements are unspoken "understandings" between two people, which can be implied from their conduct.28

Of course, courts are always more willing to enforce written cohabitation agreements than oral agreements, provided the terms of the agreement are independent of the sexual relationship between the parties. A written agreement clearly defines the parties’ expectations and understandings. A signature by both parties indicates their understanding and acceptance of the terms. It also is to the client’s benefit to have the partner represented by their own attorney, so as to avoid later claims of unfairness or duress which could affect enforceability. Written agreements executed by both parties are seldom perfect, but they are always better than oral or implied agreements.

Trends and Future Developments. Illinois’s Limited Liability Company Act29 provides for the protection of corporate limited liability, and the flexibility of a partnership. People are entitled to create LLC operating agreements30 with formation papers and to file those papers with the Secretary of State.31 Through innovative lawyering, some couples have used the LLC as a legal construct to effectuate their relationship needs. An LLC can be a great arrangement for an unmarried couple with many assets and various investments. The liability that each party has to the other can be formally structured. If unmarried couples are unable to secure asset protection under Illinois family law statutes, and wish to form something other than a contract, is it appropriate that a relationship between an unmarried couple or same sex relationship be recognized by creating limited liability companies? Does an LLC created by people who are not married create a legal "entity" that could buy property, provide health insurance to its members, obtain credit cards, serve as the couple’s consulting company, or lease a car? The answer is yes!32 While an LLC can be formed and dissolved without need of court proceedings,33 there are complex legal and tax issues related to the effects of forming an LLC, and clients should consult with tax attorneys and estate planners prior to forming one.

Other persons may simply elect to title property as joint tenants with rights of survivorship. Joint tenancy can make the transfer of property between an unmarried couple easier, but may have negative tax consequences, unless each party’s contribution was documented through ownership. Revocable trusts may be an answer to this problem, as each party can create a revocable living trust and convey each of their interests into a separate revocable living trust.34 A revocable living trust can also be a member of an LLC. An unmarried couple with assets and investments can consider combining an LLC with two revocable trusts, and place active assets into an LLC with revocable living trusts as members. To maximize their benefit, limited liability companies can be formed for each active investment asset. The revocable trusts can hold title to all non-active investment interests such as bank accounts, stocks and bonds. A couple can then protect themselves against personal liability while providing maximum income tax flexibility.

Last Minute Advice and Practice Tips. Although the attorney should advise their client to never live together with a romantic partner (or even a roommate) without a written cohabitation agreement, the ability to get such an agreement depends on the other partner’s willingness to cooperate. Unless a client defines the relationship with their partner in a written contract, and has memorialized ownership and title to property in writing, the law still views both people as strangers in the event of the death of one partner or the failure of the relationship. Until a cohabitation agreement is effectuated for the client, an attorney should advise the client of the following "nevers":

1) Never contribute money to an acquisition of a major asset, such as a house or car, which is held solely in the name of the other partner. If partners agree the asset belongs to both of them, then it should be in both names. Explain to clients the various ways in which title to an asset can be held, as well as the estate issues surrounding said ownership, along with the relevant tax ramifications.

2) Never contribute money without keeping detailed records. Document if money to the other partner is a gift, and record that on the check to make it clear that it is not an obligation or loan;

3) Never put money into a joint account or hold title to other assets in joint names unless there is a written clear agreement of what is joint and what is separate.

There are also some "nevers" for attorneys: 1) never counsel a client on tax ramifications of such agreements unless this is the attorney’s area of practice or the attorney associates with an attorney with such skills35; 2) never represent both parties or advise one party that they do not need independent legal counsel36; and 3) never forget to raise unforeseen questions with the client (children, inheritances, living wills, etc.).

Conclusion. While courts are beginning to recognize some contractual rights of cohabitants and the General Assembly occasionally proposes progressive legislation, most of the issues related to cohabitation remain unresolved in Illinois. Attorneys in family law, estate planning, real estate, and other specialties need to prepare for the eventuality that a client will walk through their door and ask them about these issues. What will you tell them?

1 Mark J. Bereyso, Building Families: Cohabitation Agreements Between GLBT Couples In Illinois, <http://www. bereysolaw.com/art.shtml>, 2007.

2 Id.

3 May v. May, 286 Ill.App.3d 1060, 1063, 678 N.E.2d 71 (3rd Dist. 1997).

4 Mark J. Bereyso, Building Families: Cohabitation Agreements Between GLBT Couples In Illinois, <http://www. bereysolaw.com/art.shtml>, 2007.

5 Illinois Uniform Premarital Agreement Act, 750 ILCS 10/1,

et seq.

6 750 ILCS 10/7.

7 Currently pending in the Illinois General Assembly is the Illinois Religious Freedom Protection and Civil Union Act, HB 1826, 95th Gen. Assem., Reg. Sess. (Ill. 2007), which would create permit same sex partners to enter into civil unions, and receive the benefits of marriage conferred by Illinois law (see Rights of Married Persons Act, 750 ILCS 65/0.01, et seq.).

8 18 Cal. 3d 660. 134 Cal. Rptr. 815, 557 P.2d 106 (Cal. 1976).

9 Id. at 116.

10 577 P2d 507, (Ore. 1978)

11 Id. at 508.

12 Boland v. Catalano, 202 Conn. 333, 339, 521 A.2d 142 (1987).

13 Id. at 342.

14 77 Ill. 2d 49 (1979).

15 Id. at 65-66.

16 Id. at 59.

17 68 Ill App 3d 651 (1st Dist. 1979).

18 Id.

19 206 Ill. App. 3d 538, 564 N.E.2d 920 (2nd Dist. 1990)

20 Id. at 541-42.

21 315 Ill. App. 3d 921, 735 N.E. 2d 144 (2nd Dist. 2000).

22 Id. at 926.

23 365 Ill. App. 3d 244, 849 N.E. 2d 122 (2nd Dist. 2006).

24 Id. at 247-48.

25 750 ILCS 10/4.

26 Cir. Court Rule 15.01.3, Circuit Court of the Eighteenth Judicial Circuit, DuPage County, Illinois.

27 Bramlett v. Selman, 597 S.W. 2d 80 (Ark. 1980); Whorton v. Dillingham, 202 Cal. App. 3d 447 (1988); Dietrich v. Winters, 798 So.2d 864 (Fla. Dist. Ct. App. 2001); Crooke v. Gilden, 414 S.E.2d 645 (Ga. 1992); Bright v. Kuehl, 650 N.E.2d 311 (Ind. Ct. App. 1995); Wilcos v. Trautz, 693 N.E.2d 141 (Mass. 1998); Silver v. Starrett, 176 Misc.2d 511 (N.Y. Sup. Ct. 1998); Doe v. Burkland, 475 S.E.2d 783 (S.C. App. 1996); Small v. Harper, 638 S.W. 2d 24 (Tex. App. 1982); Watts v. Watts, 405 N.W.2d 303 (Wis. 1987).

28 Id.

29 805 ILCS 180/1-1, et seq.

30 805 ILCS 180/15-5.

31 805 ILCS 180/5-1, 5-5.

32 805 ILCS 180/13-5; 805 ILCS 180/15-5; 805 ILCS 180/15-7; 805 ILCS 180/20-5; 805 ILCS 180/30-1

33 805 ILCS 180/35-1.

34 See Trusts and Trustees Act, 760 ILCS 5/1, et seq.

35 Ill. Code of Professional Responsibility, Rule 1.1.

36 Ill. Code of Professional Responsibility, Rules 1.7, 1.16, 3.4, 4.3.

Elizabeth A. Pope is an attorney spe-cializing in the areas of Matrimonial Law and Real Estate. She received her B.A. from Saint Mary’s College in South Bend, Indiana and her J.D. from the Thomas M. Cooley Law School in Lansing, Michigan.


 
 
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