How Are Assets Divided in a Breakup of an Unmarried Couple?

The division of assets after a breakup is often a stressful and emotionally charged process, even more so for unmarried couples who may not have the legal protections and clear guidelines that come with marriage. 





Laws differ significantly worldwide and even within individual states and regions. Therefore, it’s crucial to consult a professional for personalized advice. 

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Here we present a general perspective based on the most common practices and legal principles in the United States.

Understanding Property Types

Before we delve into the division process, it’s important to understand the difference between separate and joint property:

1. Separate Property

This includes anything owned by either partner before the relationship, inheritances or gifts received solely by one partner, and personal belongings or assets purchased by individual income during the relationship. Separate property is usually not split between the partners upon separation.

2. Joint Property

Assets acquired during the relationship with shared funds are usually considered joint property. 

This may include real estate, vehicles, joint bank accounts, furnishings, and more. How joint property is divided varies significantly based on whether the couple cohabitates, has children, or if any legal agreements were in place.

Cohabitation Agreements

For cohabitating couples, a cohabitation agreement can provide a semblance of the protections married couples enjoy. 

These are legally binding contracts that set out how assets and liabilities should be divided if the couple separates. 

While not romantic, this document can significantly simplify and ease the division of assets upon separation.

Palimony

Palimony is a form of financial support akin to alimony but for unmarried couples who have separated. 

While not recognized everywhere, some states may award palimony if the couple had a verbal or written agreement, or if one partner sacrificed their career or financial stability for the sake of the relationship or household. 

However, claims for palimony are generally challenging to prove and not frequently awarded.

Child Considerations

If the couple has children, child support and custody become significant factors in the division of assets. 

The courts prioritize the best interests of the child, considering factors such as each parent’s financial stability, the child’s needs, and the current living situation. Assets may be divided or sold to meet child support obligations.

Dividing Assets Without Legal Agreements

Without a legal agreement, separating unmarried couples may struggle to equitably divide their assets. 

Generally, individuals retain their separate property, but joint assets can pose a challenge. 

Courts will often look at how the couple managed their finances and property during the relationship. 

They may also consider verbal agreements, though these can be challenging to prove.

Common Law Marriage

In certain jurisdictions, a couple may be considered legally married under common law if they meet specific criteria, like living together for a certain period and presenting themselves as married. 

In such cases, the court may divide their assets as if they were legally married, using the principles of community property or equitable distribution, depending on the state.

Conclusion

Asset division for unmarried couples can be a complex process, especially when significant assets or children are involved. 

The best course of action is usually to consult with a lawyer or mediator who can help guide you through the process and ensure a fair division. 

Proactively setting up a cohabitation agreement or discussing asset division while the relationship is still intact may also help prevent conflicts and confusion in the event of a separation.

Note that this is a general guide, and the specifics can change based on your location, your specific situation, and changes to laws or legal interpretations after this article’s last update in June 2023