Cohabitation and Personal Property

Cohabitation and Personal Property

by Justin Brewer, Associate Attorney

Cohabitation has become an increasingly popular for Wisconsin couples, young and old.  Many couples live together for years, sharing property, financial accounts, expenses, and housekeeping and childrearing responsibilities, all without getting married. But what happens when a cohabitating couple breaks up? When a married couple decides to separate, they have the divorce process. Further, the married couple’s personal property is considered martial property, and each partner has a legal right to it.

However, Wisconsin does not allow non-married couples to get a legal divorce, and their property is never considered marital property. While many states recognize common law marriages, which treat un-married couples as if they were married for legal purposes, Wisconsin abolished common law marriage in 1917. This creates unique problems for couples who may have lived together for years, accumulating personal property and financial assets, but who never married and thus do not have marital property protections.

One of the biggest problems facing cohabitating couples after a separation is deciding who owns shared property, and who gets to keep it. Personal property – generally any property that can be moved, as opposed to real estate – can be difficult to split. Some personal property comes with ownership papers or title information, like vehicles, or bank accounts. For other property, ownership is unclear, like furniture or appliances. Without the divorce process or marital property protections, cohabitating couples are left without a clear legal process for fairly and efficiently dividing their personal property.

How do couples split up property when both partners are legal owners or title holders? What happens when one partner takes more than their fair share of personal property? While cohabitating couples are left out of the divorce process, there are still some legal avenues for resolving these questions, namely unjust enrichment, and partition actions.

Unjust Enrichment

For Wisconsin cohabitating couples, unjust enrichment claims are one of the main legal options available during a separation. Unjust enrichment is legal relief and cause of action that relies on the principle that someone who receives a benefit has a duty to pay restitution if keeping the benefit would be unjust. For cohabitating couples, it is the primary way for partners to fairly distribute the value of their shared property – in some ways it is the divorce action for unmarried couples.

If a cohabitating couple separates, and one partner takes more of the personal property than is fair, an unjust enrichment claim is an option for the other partner. For example, if one partner takes all the furniture the couple purchased together, it would be unfair for that partner to keep it without paying the other partner. After all, it they didn’t buy the property by themselves! Similarly, if one partner stays at home to raise the couple’s children while the other partner goes to school or works, they might be able to claim that the other partner’s earnings should be split to avoid unjustly enriching that partner.

In cohabitation separations, couples can bring unjust enrichment claims to make their partners pay them for their contributions to property they have taken. To prove an unjust enrichment claim, a claimant must show that they worked together with their partner to accumulate property and financial assets, which the other partner has kept in an unreasonable amount without compensating the claimant. Claimants will have to show that they helped contribute financially to the accumulation of property either financially, or by contributing to childcare or housekeeping.

Claimants can show that they contributed to accumulating property in a number of ways. If the couple shared financial accounts, made home improvements for each other, paid for each other’s expenses or education, or contributed to childcare, then unjust enrichment claims may be available when another partner takes too much property after a separation.

Successful unjust enrichment claims make the partner who took or received too much property pay the other partner enough to make the split equitable.

Partition

When a couple owns property that has ownership papers or titles, splitting the property becomes trickier. While there is no legal document showing who owns a couch or appliance, there is for cars and bank accounts. When two partners co-own vehicles or accounts, one partner cannot just take the property. Partners can buy each other out of their ownership interests in this property, but when they can’t agree, they can turn to the court for a partition action. In a partition action, the court will order that the property in question be sold at a public auction. While this allows a cohabitating couple to fairly divide jointly-owned property, they are unlikely to get fair market value, and both partners would lose their interest in the property.

Cohabitation Agreements

Neither unjust enrichment claims, or partition actions are imperfect solutions. Lawsuits cost time and money, and the results aren’t always what a party wants. The best way to deal with a cohabitation break up is to plan for it before it happens. By creating a cohabitation agreement with your partner, you can establish rules and processes for who receives what property, and when after a separation. Cohabitation agreements are contracts, much like prenuptial agreements, that allow cohabitating couples to plan ahead. While it can be weird to plan for a breakup that hopefully never happens, a cohabitation agreement can save you an enormous amount of stress and money should you split from your partner.

If you are interested in making a cohabitation agreement, or are going through a cohabitation break-up and need help, the experienced team of family law attorneys at Russell Law Offices S.C. would be happy to discuss your case.