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Protecting the assets of unmarried couples
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"You have to think it through, because with joint (tenancy) and rights of survivorship, that deed says that if one party passes away, the property automatically goes to the other person," says Neiman. "State laws dictate property rights. Though some states may not call it 'joint tenants with rights of survivorship,' the law is based on the same assumption -- that upon death of one of the owners, the property passes to the other."

If the parties contributed unequally, they may want to hold the property as "tenants in common," where the percentage owned by each person is specified. If one party passes away, the person named in the will of the deceased will receive the remaining piece of the pie.

"A tenancy in common is an interest in land in which you have your own undivided interest," says Rosenthal. If the property is sold at a later date, each party will receive his or her percentage of the proceeds.

A downside risk to a tenancy in common is the chance of losing a share of the property in a dispute. If one party is sued, a court order could require the sale of the house, in which the party who is not sued will keep his or her share of the proceeds, and the creditor will be paid from the proceeds of the other party.

In the event of the death of one owner, it could be problematic if the deceased's share of the house is left to a relative who does not get along with the surviving party. In that event, the parties may not agree about what to do with the property. What if one person wants to sell the place and the other wants to keep it, but cannot afford to buy out the other?

Ideally, the parties involved will be able to work something out.

"Ordinarily, the only way out would be to file a suit for partition of the property, which is basically the sale and distribution of the proceeds of the property," says Rosenthal. The courts have discretion to work out an equitable resolution for both parties. A suit of partition takes time, and it is something that both parties may want to avoid.

Also, be concerned about title insurance. "You want to be sure that title insurance, as well as property insurance, specifically covers both individuals," says Erhardt.

William L. Abrams, a tax lawyer and partner at Abrams Garfinkel Margolis Bergson LLP in Los Angeles and New York, suggests that co-owners of property do not commingle personal assets. Keep only a minimal amount of funds in a joint account for the convenience of paying expenses related to the property, he says.

Next: "... unwed couples are more vulnerable."
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