Cohabitation Planning in Colorado

Increasingly, couples are choosing to live together without getting married. Living together involves mingling not only a couple’s personal lives, but sometimes their financial lives as well. Unfortunately, if tragedy strikes, Colorado law does not automatically protect cohabiting couples in the same way that it does married ones, no matter how committed to each other they may be.

The good news is, it’s not necessary to get married to protect the person you love from financial disaster should something happen to you. However, protecting the one you love does require some foresight and planning.

Property Concerns for Cohabiting Colorado Couples

An important first step for any cohabiting couple is to talk about their financial intentions. This may be a difficult conversation, but if you are too uncomfortable discussing separate financial situations, that may be a red flag that you’re not ready to intertwine your financial lives. Assuming both of you want the same thing, say, for the other partner to continue to reside in the home if one of you should die, you may be able to move forward in positive steps.

Think about where you will be living. If one person moves into a home owned by the other, will he or she have any rights in the property? If there is only one name on the property deed, and the property owner dies without an estate plan, the property will go to the decedent’s heirs under Colorado law. These may be parents, siblings, or children—but not the cohabiting partner. A homeowner who wants a live-in partner to inherit the property, or simply to be able to reside in the property after death, has options: grant an interest in the property to the partner during life via a deed, create a mechanism that will grant a property interest after death, or enter into a cohabitation agreement with specific contractual terms.

If the homeowner fails to plan regarding the home and the living situation, any number of undesirable scenarios could unfold. For instance, Chris and Pat could decide to live together in Pat’s house. Only Pat’s name is on the deed and the mortgage. They could live together for twenty-five years, with Chris faithfully paying half the mortgage every month. If Pat dies suddenly, with no estate plan, Chris has no legal rights to the property in Colorado and no equity in the home. Pat’s heirs would have every legal right to remove Chris from the home with little notice and no compensation.

Protecting Your Live-In Partner

In Colorado, cohabiting couples have options to protect each other’s financial interests. The Colorado Designated Beneficiary Act, enacted in 2009, allows unmarried couples, straight or gay, to designate each other as intended beneficiaries in the event of death, and to grant other rights and protections via a Designated Beneficiary Agreement (DBA).

The agreement operates in the absence of other estate planning documents, and, if there are valid documents such as a will, a trust or a medical power of attorney, the DBA is invalid to the extent that it conflicts with those documents. Also, while the DBA expresses intentions, other documents may have to be executed in order to bring those intentions to fruition. Still, a DBA is much better than doing nothing at all.

A more comprehensive option is to consult with an estate planning attorney to create a plan designed specifically to protect a live-in partner and to accomplish any other estate planning goals, such as to support a favorite charity, provide for children, or provide for elderly parents. The advantage of consulting with an experienced attorney is that he or she can address all of your estate-planning needs and explain the tax and other implications of the choices you make.

If you would like to learn more about your options for protecting the financial interests of a live-in partner, or for protecting your own interests, Davis Schilken, P.C. can help. Contact us at 303-670-9855 to arrange a consultation at one of our two locations in The Denver Tech Center and Golden, Colorado. We look forward to working with you.