Asset protection for unmarried couples who own property or businesses together
Recent figures released by the U.S. Census Bureau estimate that the American household makeup includes some 5.2 million couples that are unmarried opposite-sex partners, 413,000 that are male couples, and 363,000 female couples.
Substantial percentages of these couples are buying homes together, investing in real estate together, and even owning businesses together. Regardless of your feelings on this issue, the fact is that a romantic non-married relationship does not benefit from the same laws and regulations that protect married couples.
Before you make a substantial purchase or investment with a partner to whom you are not married, consider what will happen to that asset if the relationship ends or if one of you dies or becomes incapacitated. Once you thought it through and decided what you want, write it down.
Put together a solid written agreement that articulates who contributed what toward the purchase (including cash, credit, and sweat equity) and what will happen if the relationship ends for any reason. Keep this in mind as you decide on how the property will be titled. In addition to the possibility of a breakup, the legal ownership of property has liability and tax consequences that should be discussed and addressed before the purchase is made.
It’s common for couples to be reluctant to talk about what will happen if their relationship fails because they don’t believe it will. That kind of thinking often leads to lengthy court battles where the only winners are the attorneys. And even if the relationship lasts, the reality is that we’re all going to die at some point, and we need to plan for that.
Before you blend assets with someone to whom you are not married—whether the relationship is romantic or not—put together a written agreement that addresses all the potential eventualities and how you’re going to deal with them. It’s far easier to reach agreements on such issues when you’re happy and getting along than it is when you’re fighting or when one partner has died and the survivor is dealing with the heirs.
As part of preparing your agreement, consult with an attorney and your accountant or tax advisor to make sure you have enforceable documents that protect everyone involved and provide for the most favorable tax strategy.
Jackie
Chief Blogger
Wealth Intelligence Academy
Comments
I remember at a workshop given by WIAcademy that the facilitator said that you should not own anything,have nothing in your name and he mention using Las Vegas to set up your LLC to protect yourself from law suites, where can I find more info on that?
Posted by: Maureen Payne | February 25, 2008 09:17 PM
Our trainers do not make statements as absolute as those you list. What is an effective asset protection strategy for one person may not be effective for someone else. We teach a range of asset protection strategies, including how to set up the best entities in which to own your assets so that you reduce your taxes and lessen your exposure to risks and liabilities.
We do not give specific legal advice; we teach the concepts so that you can make an informed decision in consultation with the legal counsel of your choice.
For more information about our Asset Protection and Tax Relief advanced training, visit http://www.wiacademy.com/asset_protection.aspx
Posted by: Jackie | February 26, 2008 08:06 AM