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Learn about the benefits of domestic partnerships -- and whether they may be available to you.

Despite the fact that it's estimated only 10% of American families are made up of a working husband, a stay-at-home wife, and children, our legal and social systems still provide benefits and protections based on that model. Having been left out of this structure, lesbian and gay activists in the early 1980s sought new definitions of family and recognition of their relationships -- and domestic partnerships were born.

Domestic partners are unmarried couples, of the same or opposite sex, who live together and seek economic and noneconomic benefits granted their married counterparts. In a few states, domestic partnership status is offered and regulated by the state and grants many of the rights and responsibilities of marriage -- generally limited to same-sex couples. In other places, domestic partnership is offered by smaller governmental entities or businesses and carries more limited benefits. In either case, benefits can include:

• health, dental, and vision insurance
• sick and bereavement leave
• accident and life insurance
• death benefits
• parental leave (for a child you coparent)
• housing rights and tuition reduction (at universities), and
• use of recreational facilities.

When a state, municipality, county, organization, private company, or university or college considers providing domestic partnership benefits, it must address several important issues: Who qualifies as a domestic partner -- should heterosexual couples be covered as well as gay and lesbian couples? How will an employer identify the employee's domestic partner -- by registration? Must the couple be together a minimum number of years? Must the couple live together? Must they share expenses? Must they be financially responsible for each other? How does a couple terminate their domestic partnership? (Note that even though most domestic partnership applications ask you to state that you are financially responsible for each other's needs, these applications are generally not considered binding contracts of support.)

In 1982, the Village Voice newspaper became the first private company to offer its employees domestic partnership benefits. The City of Berkeley was the first municipality to do so in 1984. In 1995, Vermont became the first state to extend domestic partnership benefits to its public employees. In 1997, Hawaii became the first state to extend domestic partnership benefits to all same-sex couples throughout the state. In addition, California, Connecticut, Maine, and New Jersey all now offer domestic partnership status to same-sex couples who register, with a wide variance in the type of benefits offered.

Today, a number of states and hundreds of municipalities, counties, private companies, organizations, colleges, and universities offer domestic partnership benefits. The complete list of institutions is extensive; the benefits offered by each is not, however. In some cases, all that is offered is bereavement or sick leave. In other situations, the benefits offered are comprehensive -- but also costly. Often, either the employee foots the bill for his or her partner, or the company pays (when it also pays for spouses) but the employee must pay taxes on the benefits. This is because the IRS considers benefits awarded to an unmarried partner as taxable compensation.

Copyright © 2006 Nolo

Learn what a living together contract is and whether or not you need one.

A contract is no more than an agreement to do (or not to do) something. Marriage is a contractual relationship, even though the "terms" of the contract are rarely stated explicitly or even known by the marrying couple. Saying "I do" commits a couple to a well-established set of state laws and rules governing, among other things, the couple's property rights if they split up or when one of them dies.

Unmarried couples, on the other hand, do not automatically enter into a contract when they start a relationship. If you want to legally establish how you will own property during your relationship, as well as what will happen if you separate or if one of you dies, you must write out your own rules. (Married couples do something similar when they create a premarital agreement. Your agreement will be legally called a "nonmarital agreement," but we prefer the term "living together contract.")

Some couples find it unromantic or depressing to even think about making a contract governing mundane details like money and property, particularly if doing so involves thinking about what might happen in the event of separation. But preparing a sound living together agreement can help you in a whole host of ways. Practically speaking, your agreement will help you avoid trouble when you mix your money and property, and it will make clear your intentions and expectations regarding property ownership, household expenses and the like. It can also greatly ease the division or distribution of property after a breakup or death. On a more personal note, the process of negotiating and drafting your agreement may well strengthen your abilities to communicate with and understand each other.

That said, here's an overview of the legal rules and practical concerns you should think about before drafting a contract of your own.

Legal Rules Governing Living Together Contracts

For the most part, courts and judges -- not legislatures -- have made the legal rules governing living together contracts. The leading court case is the well-known Marvin v. Marvin, 557 P.2d 106, decided by the California Supreme Court in 1976. It involved the actor Lee Marvin and the woman he lived with, Michele Triola Marvin. (She used his last name even though they weren't married.) In its decision, the court announced what were to become the common legal principles governing the right of unmarried couples to make contracts. First, the court ruled that marital property laws do not apply to couples who are not legally married. Then, the court recognized that unmarried couples are here to stay. Finally, the court declared four contract principles:

• Unmarried couples may make written contracts.
• Unmarried couples may make oral contracts.
• If a couple hasn't made a written or oral contract, the court may examine the couple's actions to decide whether an "implied" contract exists.
• If a judge can't find an implied contract, she may presume that "the parties intend to deal fairly with each other" and find one partner indebted to the other by invoking well-established legal doctrines of equity and fairness.

Although Marvin directly applies only in California, other states have upheld the application of these principles to contracts made by unmarried partners -- both straight and gay. Depending on the state, however, a court may follow different legal rules. Almost all states now enforce contracts between unmarried partners, although in some states only written contracts will be enforced.

Getting Help

If you're not sure whether living together contracts are valid in your state, you'll need to consult a lawyer or do some legal research of your own. Even if you know that you can make a legal agreement, there are some situations in which you should seek a lawyer's help. Get legal advice before signing an agreement if it involves a lot of money or property -- or complicated estate planning. This is just common sense, particularly if one partner has substantially more assets than the other. Also, you should get help if it might appear that one of you has much greater bargaining power than the other. A living together contract may not be enforced if a judge concludes that one person has taken unfair advantage of the other. For example, a court is unlikely to uphold a one-sided living together contract entered into between an experienced lawyer and an unsophisticated but wealthy 19-year-old who just moved to America and speaks little English, under which the immigrant agrees to support the lawyer.

When You Need a Living Together Contract

Obviously, you don't need a contract if you are in a brief relationship. But in a long-term and serious partnership, whether you're basking in the glow of having just "joined forces" or you've been together 20 years, you should consider the legal consequences of dealing with money and property. If you are planning to mix assets or share expenses, you should most definitely put your agreement in writing, especially if a significant amount of money is involved. If you're both stone-broke, with no property and little prospect of getting any soon, you can still benefit by deciding how you will handle money and property if it ever arrives. Also, you can put more emphasis on the practical issues of day-to-day living together, such as how expenses will be paid.

What to Include in a Living Together Contract

A living together contract can be comprehensive, covering every aspect of your relationship, or it can be specific, covering only one transaction (such as a new house purchase). These contracts need not be like the fine-print monsters pushed at you when you buy insurance or a car. You can, and should, design your contract to say exactly what you both want, in words you both understand. A simple, comprehensible and functional document using common English is much better than one loaded with "heretofores" and "pursuants."

If you want your living together contract to include personal details about your relationship, make two agreements. The first one should pertain only to property and finances. Then, if the worst ever happens and you find yourselves in court, the property and finance terms will be the only ones a judge sees. Write up a second agreement, if you wish, about who will do the dishes, who will walk the dog, how many overnight guests you'll allow and whose art goes in the living room. A court won't -- and shouldn't be asked to -- enforce this kind of agreement. In fact, if you do make just one agreement that includes personal as well as financial clauses, you run the risk that a court will be distracted by the personal clauses and will declare the entire contract illegal or frivolous, thus negating the more important financial clauses.

Here are the issues that couples most often include in a living together contract:

Property and Finances Clauses

Your living together agreement should cover all of your property -- including the property you had before you began the relationship, as well as the property either or both of you accumulate during it.

Property owned before living together. You each probably had some property before you met. Making an agreement about this property may seem unnecessary, but it's not. Think about trying to sort things out ten years from now, when you've both been referring to everything around the house as "ours." You can agree to keep all of your previously owned property separate, or you might want to share some or all of it with each other. Do what suits you best.

Property inherited or received by gift during the relationship. Many people will want to keep separate the property they inherit or receive by gift. Others will want to "donate" the property to the relationship. Again, it's up to you. Remember that any property given to both of you is legally owned by both -- this includes gifts you receive at a commitment ceremony or anniversary party, even if given by a relative or friend of just one of you.

Property bought during the relationship. Many people make purchases item by item, understanding that whoever makes the purchase owns the property. Purchases can also be pooled. A consistent approach to property ownership may simplify things, but is required by neither law nor logic. Some items may be separately owned, some pooled 50-50, and some shared in proportion to how much money each contributed toward the purchase price or how much labor each put into upkeep.

Expenses

Your agreement should cover how you want to handle expenses during your relationship. For example, how will you divide the day-to-day costs for food, utilities, laundry, housing and the like, especially if expenses increase or decrease? Here are a few suggestions about how to share expenses:

• Share and share alike. Many couples have only one checking account. They both deposit their paychecks into it and pay all household bills out of it. They figure it all evens out in the end.
• Split 50-50. Some couples prefer this method. When one partner buys something for the house or pays a bill, he writes his name on the receipt and throws it into a jar. Every few months, they empty out the receipt jar and total up how much each has spent. One then writes the other a check to even things up.
• Each contributes in proportion to her income. This works especially well for people with large income discrepancies.

Separation or Death

It's wise to include at least brief provisions in your agreement stating what will happen if you split up or if one of you dies. You may simply want to say that if you separate, each of you will have the right to take immediate possession of your separate property and that all jointly owned property will be divided equally. If there is property that you own together -- but not in equal shares -- you'll want to specify a method for dividing it between you.

Though it may be difficult to think about it, it's especially important to consider what will happen if one of you dies. Without properly prepared documents, members of an unmarried couple have no right to inherit property from one another. You can use your living together agreement to specify how you want to provide for each other; it will serve as strong evidence of your intentions. Be aware, however, that writing out a plan in your agreement is not enough. You should also use a will, living trust or other estate planning documents to ensure that your plan is carried out as you wish. For more information about ways to leave your property at death, see the Wills and Estate Planning area of Nolo's website.

Dispute Resolution

We recommend that every couple who prepares a living together contract include a method for resolving any disagreements that later arise out of it. Traditionally, it this type of dispute was severe, a couple had to go to court to resolve it, but there are better alternatives now. You may want to make mediation your first-choice method for resolving disputes, stating in your agreement that you will choose a third party to help you resolve any disagreements about your living together contract. If mediation is unsuccessful, you might allow either partner to submit the dispute to formal and binding arbitration. This should be enough to avoid the complications and expenses of a lawsuit.

What Happens to Your Living Together Agreement If You Get Married?

Your living together contract will be enforceable after marriage only if it was created shortly before your marriage at a time when you both planned to marry. To be enforceable, prenuptial (or premarital) contracts must be made in contemplation of marriage.

Copyright © 2006 Nolo

There are five tests you must meet to claim your partner as a tax dependent.

If you financially support your partner (heterosexual or same-sex), you may be able to file a tax return as a single person and claim your partner as a dependent. To be able to do this legally, you must meet the following five tests.

Support. The supporting partner must provide at least 50% of the other partner's total support for the year. Support includes food, shelter, clothing, medical and dental care, education, entertainment, and just about anything you can think of.

Citizen or resident. The supported person must be a U.S. citizen, resident alien, or citizen of Canada or Mexico.

Income. The supported person's taxable income cannot exceed $2,900. Nontaxable money, such as gifts, welfare benefits, and nontaxable Social Security benefits don't count toward gross income.

Relationship. Under IRS regulations, a person who lived in your home for the entire year can be considered a dependent as long as the relationship does not violate local law. Our advice: If you meet the other four tests but may be violating the law in a state where fornication, cohabitation, or sodomy is still against the law, go ahead and claim your partner as a dependent anyway. Recent court decisions have made those laws questionable at best, and the worst that can happen is that the IRS won't allow your deduction and your tax bill will be recomputed without the deduction.

Unmarried person. If the supported person is married and files a joint tax return with his spouse, the supporting partner in this relationship cannot claim him as a dependent. There's one exception: If the married couple did not earn enough to have to file a tax return and did so only to get a refund, the supporting partner can claim the dependent.

Copyright © 2006 Nolo

To allow your partner to take care of things for you if you can't speak for yourself, you must prepare the right legal documents.

If you ever become unable to make your own health care decisions or manage your own finances -- because of injury, serious illness, or advanced age -- you probably want your partner to step in and take care of you. Unfortunately, members of unmarried couples, unlike their married counterparts, often aren't permitted to handle medical or financial decisions for each other without signed authorization.

There are a few simple legal documents you should prepare if you want to ensure that critical decisions stay in the hands of your partner: health care directives and a durable power of attorney for finances. Without these documents, your partner may face tremendous emotional and practical problems if he or she tries to make health care decisions for you in the event of a medical emergency or handle a simple financial transaction on your behalf when you're not able to. At worst, your health care and finances may be placed in the hands of a biological relative who won't consider your partner's input. And this relative may well make decisions that go against what you want.

Fortunately, the documents you need are straightforward and usually easy to complete.

Health Care (Medical) Directives

Every state has laws authorizing individuals to create simple documents setting out their wishes about the type of medical treatment they want (or don't want) if they become unable to communicate their own decisions. These documents may also name someone to direct their care.

Health care directives are particularly important for unmarried partners, although married people should have them, too, to avoid conflict with other family members. If you don't take the time to prepare them and you become incapacitated, doctors will turn to a family member designated by state law to make medical decisions for you. Most states list spouses, adult children, and parents as top-priority decision makers, making no mention of unmarried partners.

A few states do include partners in their list of potential surrogate decision makers -- including Arizona, Delaware, Maine, and New Mexico. However, only New Mexico gives priority to a long-term partner. Other states make room for unmarried partners (sometimes classifying them as "close friends") only if listed family members are unavailable. And, in the few states where domestic partnership is available for same-sex couples, registered partners have priority over other family members. However, no matter what state you live in, you can save your partner a great deal of time and trouble by planning ahead.

There are two documents that permit you to set out your health care wishes, both grouped under the broad label "health care directives." First, you need a health care "declaration," a written statement you make directly to medical personnel that spells out your wishes for medical care if you become incapacitated. Your declaration functions as a contract with your treating doctor, who must either honor your wishes for health care or transfer you to another doctor or facility that will honor them.

The second document is usually called a "durable power of attorney for health care." In this document you appoint the person you choose -- most likely your partner -- to see that your doctors and other health care providers give you the kind of medical care you want to receive. You can also use your durable power of attorney for health care to give your partner (who may be called your "attorney-in-fact," "agent," or "proxy," depending on where you live) other rights to participate in your medical care, including:

• directing your health care under any circumstances that you don't specifically address in your declaration
• hiring and firing medical personnel
• visiting you in the hospital or other facility even when other visiting is restricted
• having access to medical records and other personal information, and
• getting court authorization to enforce your health care wishes if a hospital or doctor refuses to honor them for any reason.

In some states, your declaration and durable power of attorney for health care will be combined into a single document, often called an "advance health care directive."

You can make valid health care directives if you are at least 18 years old and of sound mind. Being of sound mind essentially means that you are able to understand what the document means, what it contains, and how it works. Physically disabled people may make valid health care documents; they can direct another to sign for them if they are unable to do so.

You may change or revoke your health care directives at any time as long as you are of sound mind.

Financial Powers of Attorney

A durable power of attorney for finances allows you to name someone you trust (called your "attorney-in-fact" or "agent") to handle your finances if you become unable to take care of yourself. Every state recognizes this type of document.

As with documents directing medical care, you should seriously consider making a durable power of attorney for finances if you want your partner to manage your money if you become unable to. If you don't prepare the document and you later become incapacitated, your partner or other family members will have to ask a court for authority over your financial affairs. These proceedings, called "conservatorship proceedings," can be time-consuming and expensive -- and they can be disastrous for unmarried couples if the court names another family member to take over, especially if your finances have been intertwined with those of your partner for a long time.

You can make your financial power of attorney effective immediately, or you can specify that it should go into effect only if you become incapacitated; the latter is called a "springing" power of attorney. While some people are more comfortable making a springing document, an immediately effective document holds a potential advantage for unmarried couples in a long-term, trusting relationship. If you make your document effective immediately, your partner can handle financial transactions for you at any time, even when you are not incapacitated. This can be useful if you are out of town, under the weather, or temporarily unavailable for any other reason.

When you make a durable power of attorney for finances, you can give your partner (or other attorney-in-fact) as much or as little control over your finances as you wish. The powers you grant may include:

• using your assets to pay your bills and everyday expenses
• buying, selling, maintaining, paying taxes on, and mortgaging real estate and other property
• collecting benefits from Social Security, Medicare, or other government programs or civil or military service
• investing your money in stocks, bonds, and mutual funds
• handling transactions with banks and other financial institutions
• buying and selling insurance policies and annuities for you
• filing and paying your taxes
• operating your small business
• claiming property you inherit or are otherwise entitled to
• hiring someone to represent you in court, and
• managing your retirement accounts.

Like health care directives, you can make a durable power of attorney for finances if you are at least 18 years old and of sound mind. And you can change or cancel your document at any time, as long as you are of sound mind.

Copyright © 2006 Nolo