Committed Intimate Relationships: The New Age Common Law Marriage

In today’s evolving social landscape, understanding the nuances of committed intimate relationships (CIRs) has become increasingly important for couples, financial planners, and small business owners alike. Although many states have done away with common law marriage, a handful have implemented Committed Intimate Relationships as another means to classify unmarried couples. CIRs can significantly impact asset management, financial planning, and legal considerations, especially when they straddle the fine line between cohabitation and marriage. This blog post aims to demystify CIRs, explore their implications on assets, and offer actionable advice for those navigating these complex waters.

Understanding Committed Intimate Relationships (CIRs)

A committed intimate relationship, often referred to as a “CIR,” is a term used in Washington State to describe a stable, marital-like relationship where both parties cohabit but are not legally married. The CIR is Washington’s take on a common law marriage. While the criteria can vary, common factors considered include:

• Duration of the relationship: The length of time the couple has lived together.
• Intent of the parties: Whether both parties view their relationship as akin to marriage.
• Continuous cohabitation: Living together on a consistent basis.
• Pooling of resources and services: Sharing financial responsibilities and household duties.
• Purpose of the relationship: Commitment to a long-term, stable partnership.

Legal Implications and Differences Across States

While Washington State recognizes CIRs and provides legal frameworks for asset division upon dissolution, only a few others maintain similar mechanisms. This discrepancy can lead to legal challenges, particularly concerning property division, inheritance rights, and spousal support. Understanding these differences is crucial for couples who might relocate or maintain properties in multiple jurisdictions.

Asset Protection and Ownership within CIRs

Assets acquired during a CIR can be subject to division upon dissolution, similar to the rules governing marital property. However, the lack of a formal legal structure like marriage can complicate matters. It’s not uncommon for one party to be completely unaware of a CIR making negotiation over settlement nearly impossible. Here are key considerations when looking at assets in common:

• Joint Ownership: Couples in a CIR often share assets like bank accounts, real estate, and investments. Clearly documenting ownership and contributions can help mitigate disputes.
• Separate vs. Shared Assets: It’s essential to distinguish between assets acquired individually before the relationship and those obtained jointly during the relationship.

These designations may seem silly, but they can be the difference between walking away from the relationship with 80-100% of your assets or less than 50%. Maintaining clear, concise financial records is essential to protecting your financial interest. It is also wise to seek out legal assistance to draft some binding documents that further establish the parameters of your assets.

• Estate Planning: Drafting wills and establishing trusts can ensure that assets are distributed according to the couple’s wishes, rather than defaulting to intestacy laws.
• Beneficiary Designations: Reviewing and updating beneficiary designations on insurance policies, retirement accounts, and other financial instruments is crucial.
• Cohabitation Agreements: These agreements can outline the distribution of assets and financial responsibilities, providing clarity and reducing potential conflicts.

What The Heck Does That Mean?

Well, A CIR in Washington State could mean you are sharing the good and the bad – financially speaking. While the intent behind a CIR was to protect individuals from having to leave a long term relationship empty handed (and let’s be clear, the relationship had to meet the criteria listed above), it has added a element of fear for many people. Let’s take a look at some hypotheticals below:

• Example 1: Shared Real Estate

Consider a couple who purchased a home together while in a CIR. Upon dissolution, one partner claims a larger share based on a higher financial contribution. Without clear documentation and agreements, this scenario can lead to costly legal battles and an inequitable split regardless of who paid the larger portion of the bills, or what the agreement during the relationship was.

• Example 2: Business Ownership

Or perhaps a couple in a CIR co-found a business. Upon separation, the parties realize there is no partnership agreement, clearly documented role or record of initial contribution. This lack of record-keeping detailing each partner’s stake and role in the business can lead to significant complications and financial losses. One party could walk away with everything or nothing — oftentimes resulting in the forced sale of the company. And don’t be fooled, that “business debt” becomes a community liability as well.

Lessons Learned and Best Practices for Protecting Assets in CIRs

• Document Contributions: Keeping meticulous records of individual contributions toward jointly owned assets can prevent disputes.
• Legal Agreements: Cohabitation agreements and business contracts can provide a clear framework for asset division.
• Open Communication: Regularly discuss financial goals, contributions, and expectations.
• Professional Guidance: Engage with financial planners and legal experts to draft agreements and plan for asset protection.
• Regular Reviews: Periodically review and update financial plans and legal documents to reflect changes in the relationship and assets.
• Prenuptial Agreements and Estate Planning** While prenuptial agreements are traditionally associated with marriage, similar contracts can be invaluable for couples in a CIR. Estate planning tools like wills, trusts, and power of attorney can ensure the couple’s wishes are honored and assets are protected.

Understanding the intricacies of committed intimate relationships is vital for couples, financial planners, and small business owners. CIRs can significantly impact asset management and financial planning, making it essential to approach these relationships with clarity and foresight.

If you find yourself navigating the complexities of a CIR, consider consulting with a financial planner or legal expert to ensure your assets are protected and your future is secure. For small business owners, additional considerations regarding business continuity and ownership should be top of mind, as CIRs can directly impact asset allocation and business operations.

Bottom Line: Be cognizant of your shared finances, keep records of all things financial and when in doubt, consult an attorney.

This article is provided for educational purposes only. This is not and was never intended to be legal advice. Each situation is unique – always speak to legal counsel prior to making any long term financial decisions with your partner.