Jude Galligan and Amber Gugino bought a condo together a year and a half ago, putting them right into the mainstream of American real estate, where signing a real estate contract these days often precedes saying "I do."

What the Austin, Texas, couple did before they got to the closing, however, is unusual — even though legal experts say it shouldn’t be. They put their financial intentions in writing to make sure they were on the same page if life’s "what ifs" — breakup, death, job loss — were to unfold.

"We’re planning to get married," said Galligan. "The biggest piece of insurance for us was the understanding of what would happen (to the property) if the relationship terminated."

Such agreements should be the norm among cohabiting couples, says Frederick Hertz, an Oakland, Calif., real estate lawyer who specializes in advising unwed couples. But he says they’re a rarity.

"I’d be surprised if more than 10 or 20 percent of unmarried co-owners have an agreement," said Hertz, who is the co-author of "Living Together: A Legal Guide for Unmarried Couples."

That’s a small segment of a big number: Census data suggest that more than 12 million unmarried partners were living together between 2005 and 2007.

Most such couples don’t even discuss the prospect of an unhappy ending, Hertz said.  

"I’d say 50 percent never even give it a thought," Hertz said. "In cases where a couple is breaking up, and one of them has been putting more (financial support) into the house, I ask them, ‘What did you talk about?’ " before moving in together.

"They say, well, we were going to be together forever, so we didn’t talk about it," he said. "It’s amazing how people can avoid talking about something difficult."

Galligan and Gugino didn’t avoid it. They planned for potential breakup, unemployment and death.

"If the relationship ended, then we agreed in writing to sell the property and to split any loss or gain," Galligan said.

Galligan said he took the steps because he’s a real estate agent and often writes about condo development at his Downtown Austin Blog. He sees many unwed couples who are purchasing homes in the area — or are selling because they’re breaking up or in financial trouble, he said.

"The most important decision for us was to purchase a condo that either of us could afford if one of us could no longer make the payments" because of the other’s death or prolonged job loss, said Galligan. …CONTINUED

They rewrote their wills to specify that the condo should pass to one another, and they purchased life insurance to cover the mortgage if one of them should die.

So where does one begin to plan for the what ifs?

Hertz said a first step is to legally clarify the state of their union, which can be affected by state laws that do — or don’t — cover their partnerships under the umbrella of marital law.

In six states, for example, same-sex couples can marry; in another six they can register as domestic partners, both of which trigger marital law, he said.

Then there’s the matter of who owns how much of the house. Not all couples split the expenses 50-50, which may be just fine but could cause big ripples in a breakup if not spelled out, Hertz said.

"The biggest issue for unmarried couples is, if one earns more or has inherited wealth, is their ‘excess contribution’ (to the home) a gift or a loan?" he said. "In a typical marriage, where they pool their money and the marriage breaks up, the higher earner (or bigger contributor) doesn’t get that money back.

"For unmarried couples, there isn’t that presumption," he said. "This is often the touchiest issue."

Dissolution has to be planned for, he said. "Each state has a process of ending a nonmarital co-ownership, but in most it’s a poor and cumbersome proposition."

The death of one partner — unless other financial plans have been made — may precipitate a home sale, he said, and it’s incumbent on individuals who have children from previous relationships to make it clear what will happen to the house in the event of death.

"I typically try to encourage people to buy an insurance policy for the kids so they can leave the house to each other," Hertz said.

As complex as the issues can become, couples have numerous choices and there’s no "one size fits all," he said.

"There is no right or wrong," Hertz said. "The right answer is the agreement that matches your heart."

Mary Umberger is a freelance writer in Chicago.


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