Abstract The rights of unmarried cohabitants in the USA are determined by the courts of each state. Until the early 1970s, most states gave unmarried cohabitants virtually no rights in the property of their partners. Since then the law has developed rapidly and inconsistently from state to state. This article discusses the principal approaches used to confer rights on unmarried cohabitants. It also discusses the special tax challenges faced by unmarried cohabitants when they transfer properties to each other. Introduction In the USA the existence of a marital relationship, the rights of married and unmarried cohabitants in the property of each other, and the obligations each of them owes to the other are determined under the laws of each of the 50 states and the District of Columbia. There is no federal law or uniform body of state law defining marriage or stipulating what marital rights and obligations are.1 The rights and obligations of married couples are generally prescribed by statute while the rights and obligations of unmarried couples are almost always found in the case law of the different states.2 Although state law marital rights and obligations differ from state to state, marriage when validly contracted under the laws of one of the states entitles the married individuals to certain federal tax and other benefits and subjects them to certain tax burdens under federal law regardless of the state in which their marriage was contracted.3 The subject of the rights and obligations of unmarried cohabitants in the USA has become of increasing importance as the annual marriage rate has declined significantly over the past 40 years, dropping from 97 per cent in 1967 to 69 per cent by 2014.4 Consistently, with the decline in the marriage rate, the number of unmarried couple households in the USA has grown 41 per cent from 2000 to 2010, from 5,475,768 to 7,744,7115 and to about 9,000, 000 by 2016.6 The section ‘Marriage and the rights and obligations of married individuals’ of this article describes how marriages are contracted and the types of rights given to and obligations imposed on married individuals by the laws of the different states. The section ‘Cohabitation and the rights and obligations of cohabitants’ describes how these rights and obligations differ in the case of unmarried cohabitants. The section ‘Federal tax treatment of unmarried cohabitants’ describes how the federal tax law treats married couples differently from unmarried cohabitants. Marriage and the rights and obligations of married individuals Determining whether a valid marriage exists The definition of marriage varies from state to state. Examples of the various definitions include a ‘legal union of two persons’,7 ‘a civil contract’,8 ‘a personal relation arising out of a civil contract between two persons, to which the consent of the parties capable of making that contract is necessary’.9 The existence of a legal marriage is generally determined by the laws of the state in which it is claimed to have been contracted. Each state has its own set of statutory procedural requirements that must be satisfied for a marriage to be valid. Most states require that a couple obtain a marriage licence, generally from the county clerk’s office in the county where the marriage ceremony will take place, and participation in a marriage ceremony performed by a person with legal authority to perform marriages, generally a judge or a court clerk or a clergy member. The ceremony should include a statement by the parties that they intend to be married to each other.10 The public policy in favour of marriage will often validate a marriage that was entered into without compliance with all of a state’s procedural requirements. For example, marriages contracted without a licence have been validated when the state statute required parties to obtain a marriage licence but did not explicitly make a marriage without a licence invalid.11 Similarly, in some cases the lack of qualification of the officiant may not invalidate a marriage.12 Fifteen states and the District of Columbia recognize marriages that are contracted without a licence and a ceremony.13 These marriages are referred to as common law marriages. Although the laws from state to state are different, the following four elements are generally required to establish a common law marriage: The individuals must have the capacity to marry each other. They must live together. They must intend to be married. They must hold themselves out as being married. Some states that do not recognize common law marriages entered into within its jurisdiction do recognize common law marriages validly contracted in another state or country.14 The rights and obligations of married individuals to each other In the USA, the status of marriage creates a civil contract between the spouses, the terms of which are dictated by the state. The state-imposed contract creates financial obligations and rights between the spouses that will affect each spouse’s rights to his or her own property and to the property and income of each other. Most states recognize the right of spouses, either before or after their marriage to each other, to vary the terms of the state prescribed marital contract by entering into their own individually negotiated contracts.15 During the marriage, under the laws of most states, each spouse owes the other the duties of support16 and services. Support means financial support at a level at least sufficient to meet basic needs. The duty to provide services generally includes providing for the care of the home and family, and companionship, including sexual companionship.17 In addition, in some community property states,18 the spouses acquire rights during the marriage in property earned by each other.19 The laws of all states give spouses interests in certain property acquired during their marriage despite the manner in which title to the property is held. When the marriage is dissolved, these rights are satisfied by property divisions and transfers of cash and other property either pursuant to an agreement or by judicial decree. The property that is divisible at divorce is referred to as community property in community property states and marital property in the other states. In either case, the terms refer generally to property acquired during the marriage other than property received as gift from third parties and by bequests.20 Some states give their courts the power to divide all of the property of one spouse between the spouses, regardless of when or how it was acquired.21 When community property is divided between spouses, it is divided equally between them.22 When marital property or separate property, in those states that divide separate property, is divided between the spouses, the division is required to be equitable, not necessarily equal. The state equitable division statutes generally suggest factors to be taken into account by the judges making the division, including factors such as the income and property of each of the spouses and the duration of the marriage and the age and health of both parties.23 The laws of most states give the courts the power to require one spouse to pay the other spouse alimony or maintenance for some period of time after divorce.24 If an individual dies without a will (‘intestate’), state law provides rules as to how the individual’s property will be divided among members of the individual’s family. In community property states, the surviving spouse retains his or her share of the community property and often receives a share of the deceased spouse’s community property. In California, for example, the surviving spouse will receive one-half or one-third of the community property of the deceased spouse if the deceased spouse is survived by issue.25 Similarly, in common law states, the surviving spouse of an individual who dies intestate generally receives some share of the deceased spouse’s estate.26 In many common law states, a surviving spouse has a right to receive a minimum share of the deceased spouse’s estate regardless of what the deceased spouse’s will provides.27 Cohabitation and the rights and obligations of cohabitants Determining whether individuals are cohabitants Because none of the states in the USA have enacted statutes that impose mutual rights and obligations on unmarried cohabitants, there are no statutory rules defining the status. The courts of one state, Washington, because they have recognized that unmarried cohabitants by reason of their status acquire certain rights and obligations, have provided a definition. Originally the courts referred to this status as a ‘meretricious relationship’. More recently, the term was changed to ‘committed intimate relationship’.28 The status is defined as: a stable, marital-like relationship where both parties cohabit with knowledge that a lawful marriage between them does not exist. [citations omitted] Relevant factors establishing a meretricious relationship include, but are not limited to: continuous cohabitation, duration of the relationship, purpose of the relationship, pooling of resources and services for joint projects, and the intent of the parties. [citations omitted]29 The American Law Institute’s Principles of the Law of Family Dissolution reviews and analyses divorce and family law issues. It is intended to guide legislatures and the courts in developing the law relevant to family issues, including the treatment of unmarried cohabitants (referred to in the Principles as ‘domestic partners’) on the dissolution of their relationship. For this purpose the American Law Institute defines domestic partners as ‘two persons of the same or opposite sex, not married to one another, who for a significant period of time share a primary residence and a life together as a couple’.30 The rights and obligations of unmarried cohabitants to each other There are no statutory or judicial rules that define the rights and obligations of unmarried cohabitants to each other while they are cohabiting. At the termination of the relationship during the lives of both cohabitants Most state courts provide some relief to unmarried cohabitants whose expectations of support and property rights have been destroyed by the breakup of their relationship. The courts that provide this relief have developed a number of different principles on which to base the relief, including: the creation of rights similar to marital rights based on the status of cohabitation; the enforcement of express or implied agreements; the application of the common law principles of restitution and unjust enrichment. Other state courts, now a small minority, deny relief on any basis, including relief based on claimed agreements because, in their view, the agreements are unenforceable as they are based on a meretricious relationship. Status The American Law Institute’s Principles of the Law of Family Dissolution advocates the creation of rights for unmarried cohabitants based on the existence of their status as cohabitants.31 Property acquired during the relationship that would have been marital property if the parties had married should be treated in the same manner as the marital property of married individuals.32 An unmarried cohabitant should be entitled to compensatory payments such as alimony to the same extent that a married individual would be entitled.33 The courts of only one state, Washington, explicitly confer rights on unmarried cohabitants based solely on status. In Connell v Francisco, the Washington Supreme Court decided that, on the dissolution of a relationship between unmarried cohabitants, there is a rebuttable presumption that the courts have the power to equitably divide all property acquired by the parties during the partnership that would have been community property if the parties had been married. There is no power to divide property that would have been characterized as separate property if the parties had married.34 The courts of a few other states have come close to recognizing status as a basis for dividing property. The Kansas Court of Appeals in Eaton v Johnston, determined that the courts can use their inherent power to do equity by ordering an equitable division of property accumulated by unmarried cohabitants during their relationship.35 Similar results have been reached by courts in Mississippi, Oregon,36 and West Virginia.37 Although the courts of other states have pursued and sanctioned ways to provide relief to unmarried cohabitants, the ones that have considered status-based relief, have rejected the idea.38 Express contract Until the early 1970s, the courts of most states refused to enforce agreements between unmarried cohabitants to support each other or to share rights in property.39 The refusal was based on the recognition that an important element in all of these agreements was the understanding, if not the explicit agreement, that the parties would engage in sexual relations with each other. In many states this activity was either a crime or was considered immoral.40 Marvin v Marvin was one of the first, and certainly the most well-known, decision to enforce these agreements.41 The California Supreme Court in the Marvin decision, accepted the principle that contracts explicitly based on the performance of sexual services were unenforceable. In its view, however, it was possible to have a contract between unmarried cohabitants that was based on other aspects of their shared lives together. The consideration for an agreement by one party to share his or her future earnings with the other could be based, for example, on an agreement by the other to serve as companion, homemaker, housekeeper, and cook.42 The courts that enforce these contracts have rejected a number of traditional policy arguments against enforceability, including arguments that these agreements sanction prostitution, and that enforcing them would discourage marriage. The first argument is said to be overcome when there is consideration for the agreement other than sexual services. As is the case with all contracts, the consideration furnished by each party does not have to be equal. It is enough, for example, if one party has promised to make a home for the other, to cook for the other party, and to act as a social companion.43 The second argument may be refuted by the observation that the lack of enforcement of these agreements would be more likely to discourage marriage than encourage it. Lack of enforcement would give the party with greater resources and earning power, a significant incentive to avoid marriage in order to protect his or her property and earnings. Most other states whose courts have considered the question have determined that express contracts between unmarried cohabitants for support or property rights are enforceable, provided that the agreement does not rest upon illicit meretricious consideration.44 These states include Arizona,45 Florida,46 Indiana,47 Michigan,48 New Jersey,49 New York,50 North Carolina,51 and Wisconsin.52 The courts of some states will deny enforceability when the only consideration furnished by the claimant as consideration for the alleged agreement are the kinds of services one spouse would typically provide for the other such as business advice,53 moving into a home with the other,54 homemaking, and domestic services.55 A few others deny enforceability to any agreement between unmarried cohabitants promising property or support because the sexual relations expected in connection with cohabitation constitute immoral consideration,56 or because enforcing these agreements would be inconsistent with the public policy in favour of marriage, or would be inconsistent with the state’s repeal of common law marriages.57 Implied contract Under general principles of contract law, there is no requirement that agreements must be expressed in order to be enforceable. An agreement ‘may be inferred wholly or partly from conduct’.58 Contracts inferred from conduct are referred to as contracts implied in fact to distinguish them from contracts implied in law. The latter are quasi-contracts rather than actual contracts. They are obligations created by law to avoid the unjust enrichment of one party at the expense of the other. Contracts implied in law, as they sometimes arise between unmarried cohabitants, are discussed in the next section of this article dealing with restitution and unjust enrichment. The courts in many states, including Alaska, Arizona, California, Indiana, Nevada, Wisconsin, and the District of Columbia, have ruled that implied contracts to divide property acquired while cohabiting or to pay for domestic or other services are enforceable. Contracts to divide property may be implied from the conduct of the parties on the theory that the law should be applied to carry out the reasonable expectations of the parties.59 If the parties’ actions are sufficient to support a conclusion that they intended to hold property as if they were married, these courts will create an agreement based on these intentions. In Western States Construction, Inc v Michoff the Nevada Supreme court found an implied contract from the facts that (i) the parties, Lois and Max, lived together and held themselves out as if they were married, (ii) they filed federal joint income tax returns, (iii) they designated Max’s stock in Western States Construction, Inc community property in their election to have the corporation treated as an S corporation for federal income tax purposes, and (iv) Max insisted that Lois sign a consent as a spouse to his entering into a partnership.60 The Supreme Court of New Jersey has also ruled that an implied promise to provide support for life is enforceable.61 In contrast, New York, while recognizing the enforceability of express oral agreements between unmarried cohabitants for support or property will not enforce an implied agreement when it is based on the claimant providing services that are normally done by married persons such as the performance of domestic services. The rationale is based on the difficulty of implying a contract from the rendition of services between individuals who are living together in a ‘relationship … that makes it natural that the services were rendered gratuitously’.62 The courts in Michigan have reached a similar conclusion.63 Rights derived from and obligations imposed by principles of restitution and unjust enrichment If unmarried cohabitants cannot prove the existence of an express or implied contract, relief may be available under the related doctrines of restitution and unjust enrichment. Section 28 of the Restatement (Third) of Restitution & Unjust Enrichment (“Restatement (Third)) provides: If two persons have formerly lived together in a relationship resembling marriage, and if one of them owns a specific asset to which the other has made substantial, uncompensated contributions in the form of property or services, the person making such contributions has a claim in restitution against the owner as necessary to prevent unjust enrichment upon the dissolution of the relationship.64 The comments to section 28 provide that the section is available to individuals who cohabit in a relationship resembling marriage. It is not available, for example, to other family members who live together. The underlying assumption is that cohabitants in a relationship resembling marriage reasonably expect some form of compensation or sharing of property in exchange for their contributions to each other while other family member, parents and children or siblings, who perform services for or transfer property to each other are generally assumed, in the absence of an agreement, to be acting gratuitously.65 The position taken on this same topic in the Restatement (First) of Restitution (‘Restatement First’)66 was very different. Reflecting society’s then attitude towards unmarried cohabitation, the remedy of restitution was permitted only in cases in which the party seeking relief believed that he or she was married to the other. In that case, the deceived party was entitled to recover the reasonable value of his or her services offset by the value of the benefits received during the relationship.67 The position taken in Restatement (Third) reflects current case law of most states and in the District of Columbia.68 At the termination of the relationship by the death of one of the cohabitants If an express or implied agreement is found to exist and is held to be enforceable, it is generally enforceable after the death of one of the parties. In Abrams v Massell, for example, the Court of Appeals of Georgia enforced a written contract to make a will.69 In the Roccamonte case, the New Jersey Supreme Court enforced an agreement to provide lifetime support against the estate of the decedent who had made the agreement.70 Unless there is a written agreement between the cohabitants, however, the application of the dead man’s rule will ordinarily make it difficult to prove the existence of the agreement. The typical application of this rule prevents an individual from testifying on the individual’s own behalf as to any communication or transaction with the deceased person.71 Some versions of the rule have a broader scope and prevent any person who is an interested party to litigation and whose interest is adverse to the decedent from testifying against the estate.72 This rule has been applied to prevent a surviving cohabitant from testifying in his own behalf as to the existence of an oral agreement to be compensated for services rendered to the decedent during her lifetime.73 The rights conferred on the members of a committed intimate relationship status in Washington are enforceable at the death of one of the cohabitants. These rights are not in the nature of creditors’ claims but instead are claims for the partition of property in which each cohabitant has non-contractual property rights.74 Choice of law issues When unmarried cohabitants move from one state to another, questions arise as to the selection of the appropriate state law to use to determine their rights against each other when their relationship terminates. For example, if two individuals who begin their cohabitation in a state such as California, which recognizes and enforces implied contracts between cohabitants, terminate their relationship while living in New York, which does not, which law should govern? If they begin their cohabitation in a state such as Washington, which recognizes cohabitation as a status that gives each of the cohabitants rights in certain property of the other, and separate in a state that does not, which law should govern their rights?75 Federal tax treatment of unmarried cohabitants When married individuals separate or divorce, the transfers of cash or other property that they are required to make to each other by law or by agreement are generally protected from taxation by case law and by a number of different provisions of the Code.76 The Supreme Court ruled in 1917 in Gould v Gould that alimony payments were not taxable to the recipient.77 Under current law, divorcing or separating spouses may determine by agreement whether alimony payments will be income to the receiving spouse.78 If alimony payments are taxable to the recipient, they are deductible by the payor.79 The transfer of appreciated property from one spouse to the other in discharge of obligations owed to the recipient is generally not a gain recognition event.80 Similarly, most transfers of property between spouses are protected from gift and estate tax by the marital deduction.81 And transfers made after a divorce pursuant to a marital settlement agreement can easily be protected from gift and estate tax by the gift tax exception for transfers made pursuant to written agreements relative to marital and property rights that are entered into within one year after or two years before a divorce.82 If this exception is not available, the transfers will be protected if the transferor or the transferor’s executors can show that the value of the property transferred did not exceed the value of his or her marital obligations.83 The possible tax consequences of the remedies sought by and awarded between unmarried cohabitants are not often considered. Because they are not protected by the sections of the Code or the case law discussed above, the consequences can be unexpected and significant. Payments of cash or transfers of property between unmarried individuals are potentially subject to both income taxes and gift taxes. Federal income tax Section 61 of the Code requires individuals to include in their gross incomes all receipts of cash or other property unless the receipt is specifically excepted from gross income by another section of the Code. The only Code section that is potentially applicable to a payment from one unmarried cohabitant to the other pursuant to an express or implied agreement is section 102. Section 102 excepts from gross income the amount of gifts received by a taxpayer. But section 102’s exception for gifts does not apply to payments made by one individual to another unless they are prompted by the disinterested generosity of the transferor.84 It may be difficult to characterize the payments, required to be made under an express or implied agreement between unmarried cohabitants, as payments made out of detached or disinterested generosity.85 If, however, the payments required to be made are either required by a state law that confers marital type rights by reason of the status of the individuals as unmarried cohabitants, or under an application of the principle of unjust enrichment, the result may be different. Payments required by reason of status, should be protected from gross income treatment for the same reason that Mrs Gould’s alimony payments were not gross income to her. The payment should be regarded as a portion of the other cohabitant’s assets to which the claimant is equitably entitled.86 Payments required to be made under the principle of unjust enrichment are made because the receiving cohabitant is found to have provided services or cash or other property to the other with the reasonable expectation of receiving some form of compensation or sharing of property in exchange. If the thing of value provided was services, the payment made should be gross income. If the thing provided was cash or other property the recipient should have gross income to the extent the value of what the recipient received exceeds the amount of cash plus the recipient’s basis in the other property provided. If the obligation that one unmarried cohabitant has to the other is satisfied by the transfer of appreciated property, the transfer will likely be a gain recognition event to the transferor.87 Federal estate, gift, and generation-skipping transfer tax The gift tax The federal gift tax applies to all transfers from one individual to another for less than an adequate and full consideration in money’s worth. The first $14,000 worth of annual gifts from one individual to another each year is excluded from the donor’s taxable gifts. In addition, under current law, the first $5,490,000 worth of lifetime gifts are protected from the gift tax.88 Once an individual’s lifetime gifts exceed this amount, they are subject to a 40 per cent gift tax. If one cohabitant transfers cash or property to the other, the transfer will be treated as a taxable gift unless the transferor can show that the recipient received full consideration in money or money’s worth or unless the transferor can show that the transfer was made to discharge an obligation imposed by state law. The fact that the payment may be treated as taxable income to the recipient does not mean that the payor has not made a taxable gift. The Internal Revenue Service has concluded that a transfer may be subject to both the gift and the income tax.89 Express or implied agreements An express or implied agreement by one individual to provide a payment to another in exchange for the other’s promise to live with him or her and provide companionship is probably not a consideration in money or money’s worth.90 If the agreement includes an agreement to provide household or other services, the value of those services would constitute ‘money or money’s worth’, but the fair market value of those services may not be equivalent to the bargained for consideration. If it is not, the person making the payment will be making a taxable gift. Restitution and unjust enrichment If the payment that one cohabitant is required to make to the other is based on the principle of unjust enrichment, the amount of the gift, if any, should be limited to the excess of the value of the payment over the value of the services or other property that gave rise to the claim for unjust enrichment. Status If the payment one cohabitant makes to the other is required to be made on account of the cohabitant status rather than as a result of an express or implied agreement, as is the case in Washington, the transferor will likely be protected from gift tax. This is so because the federal gift tax law does not apply to payments made by one individual to another, if local law requires the payments to be made independent of the existence of an agreement between the parties. The estate tax The gross estate of a decedent for federal estate tax purposes is the value of the property the decedent owns at death, plus the value of property the decedent transferred during life over which the decedent either retained or possessed certain powers at death, plus the value of property subject to a general power of appointment. The estate tax is imposed on a decedent’s taxable estate, which is defined as the gross estate reduced by certain deductions, including a deduction for certain debts. To the extent that the decedent had made taxable gifts of less than $5,490,000 during life, the balance of the exemption in most cases will be available to protect the estate from estate tax. To the extent the exemption is not available, the taxable estate will be subject to an estate tax equal to 40 per cent of the value of the taxable estate. A debt based on a contract is deductible for estate tax purposes only to the extent the contract was based on adequate and full consideration in money and money’s worth.91 Express and implied agreements When a surviving cohabitant successfully pursues a claim against the deceased cohabitant’s estate, the obligation to satisfy the claim will be deductible only if the estate can show that the surviving cohabitant provided the necessary consideration in money or money’s worth.92 For this purpose, love, affection, and promises to live together will not be treated as good consideration. Restitution and unjust enrichment If the payment that one cohabitant is required to make to the other is based on the principle of unjust enrichment, the payment may be deductible. Arguably, because a claim for unjust enrichment can be enforced regardless of the lack of an express or implied agreement between the two cohabitants, the Code section that denies deductibility for a claim based on a contract that was not based on adequate and full consideration in money or money’s worth is not applicable. Status If the payment one cohabitant makes to the other is required to be made on account of the cohabitant status rather than as a result of an express or implied agreement, the payment should be deductible by the decedent’s estate. The generation-skipping transfer tax The generation-skipping transfer tax applies to generation-skipping transfers. Generation-skipping transfers include gifts and bequests to skip-persons. For this purpose, ‘skip-persons’ are defined as those members of the transferor’s family who are assigned to generations below the generation of the transferor’s children and to those non-family members who are more than 37½ years younger than the transferor. Each individual, under current law, has a $5,490,000 GST exemption that can be allocated to gifts and bequests to protect them from the generation-skipping transfer tax. Gifts and bequests to skip-persons that are not protected by the GST exemption are taxed at a rate of 40 per cent in addition to the gift or estate tax. Lifetime payments Any payment to a cohabitant who is more than 37½ years younger than the transferor will be a generation-skipping transfer if the transfer is treated as a taxable gift for gift tax purposes. Payments after death Any post-death payment to a cohabitant who is more than 37½ years younger than the decedent, will be a generation-skipping transfer unless the payment is made to satisfy an obligation other than an obligation based on a promise not based on adequate and full consideration in money or money’s worth. Conclusion With the exception of Washington, no state imposes contractual rights and obligations on unmarried cohabitants because of their relationship. The lack of a state-imposed contract leaves economically disadvantaged cohabitants with the possibility that the end of their relationship will leave them with none of the economic resources that were accumulated while the two cohabitants were together. Conversely, the lack of a state-imposed contract leaves wealthier cohabitants vulnerable to claims under implied contracts, claims for restitution, and claims for unjust enrichment. In order to reduce these risks, unmarried cohabitants should consider entering into express agreements prescribing what they intend their rights and obligations to each other should be.93 Unless and until the federal government treats unmarried cohabitants for tax purposes the same way as it treats married individuals, unmarried cohabitants should take care to structure their agreements in a manner that will minimize the potential tax consequences of the payments and other transfers that they may be required to be made. Carlyn S. McCaffrey provides legal counsel on domestic and international tax and estate planning for high-net-worth individuals. She also advises individuals and institutions on charitable planning matters. Carlyn is Co-head of the Private Client practice in the Firm's New York office. Footnotes 1. ‘The Constitution delegated no authority to the Government of the United States on the subject of marriage and divorce … .There is no federal law of domestic relations.’ United States v Windsor (2013) 133 S Ct 2675, 2691. 2. Many jurisdictions in the USA have enacted domestic partnership or civil union laws that permit two adults, regardless of gender, to register as a couple, provided they are not closely related. The consequences of registration differ from jurisdiction to jurisdiction but often confer on the partners rights and obligations similar to those acquired and assumed by two individuals who marry. The subject of registered domestic partnerships and civil union laws is not discussed in this article. 3. In a few cases, federal law does provide its own definition of marital status for the purposes of determining eligibility for certain benefits. For example, s 1614(d)(2) of the Social Security Act provides that ‘if a man and woman are found to be holding themselves out to the community in which they reside as husband and wife, they shall be so considered for purposes of this title notwithstanding any other provision of this section’. See also Dutko v Colvin (ED Mich 2015) No 15-CV-10698, 2015 US Dist. LEXIS 150194. 4. National Center for Health Statistics, see <https://www.gov/nchs/nvss/marriage_divorce_tables.htm> accessed 3 September 2017. See also Lawrence W Waggoner, ‘With Marriage on the Decline and Cohabitation on the Rise, What about Marital Rights for Unmarried Partners’ (2015) 41 ACTEC LJ 49, 51. 5. Waggoner, ibid 54. 6. Renee Steppler, Number of US Adults Cohabiting with a Partner Continues to Rise, Especially Among Those 50 and Older (Pew Research Center 2017) <http://www.pewresearch.org/fact-tank/2017/04/06/number-of-u-s-adults-cohabiting-with-a-partner-continues-to-rise-especially-among-those-50-and-older/> accessed 3 September 2017. 7. Conn Gen Stat, s 46b-20(4). 8. NY Dom Rel Law, s 10. 9. Cal Fam Code, s 300. 10. See eg NY Dom Rel Law, ss 11–13. New York also recognizes marriages solemnized by a written contract of marriage if signed by both parties and at least two witnesses within the state of New York and acknowledged by the parties and witnesses before a judge of a New York court of record. The contract must state the place of residence of the parties and witnesses and the date and place of the marriage. NY Dom Rel Law, s 11(4). See also Unif Marriage and Divorce Act, ss 201–210. 11. See eg Carabetta v Carabetta (1980) 438 A 2d 109 (Conn), validating a marriage solemnized by a priest when the couple failed to obtain a marriage licence. The Connecticut Supreme Court interpreted the Connecticut statutes that prohibited marriage without first obtaining a licence as imposing a requirement the violation of which was punishable by the imposition of a fine but did not affect the validity of the marriage. A contrary result was reached under Virginia law in MacDougall v Levick (2016) 782 SE 2d 182 (Va Ct App) (Va. Ct. App. 2016), appeal granted 2016 Va Lexis 206. 12. Unif Marriage and Divorce Act 1974, s 206(d). 13. The states that recognize common law marriages are Alabama (if entered into before 2017), Colorado, Georgia (if entered into before 1997), Idaho (if entered into before 1996), Iowa, Kansas, Montana, New Hampshire (for inheritance only), Ohio (if entered into before 1991), Oklahoma, Pennsylvania (if entered into before 2005), Rhode Island, South Carolina, Texas, and Utah. See Social Security Programs Operation Manual System, GN 00305.075 State Laws on Validity of Common-Law (Non-Ceremonial) Marriages <https://secure.ssa.gov/poms.nsf/lnx/0200305075> accessed 7 May 2017. 14. According to the Social Security Programs Operation Manual, these states include Illinois (if the couple lived in a state that recognized common law marriages at the time they entered into the marriage), Indiana, Minnesota (if the couple lived in a state that recognized common law marriages at the time they entered into the marriage), New York, Ohio, Oregon, South Dakota, Wisconsin (but not if it arises during a brief visit to a jurisdiction that recognizes common law marriages), and Wyoming. See Social Security Programs Operation Manual System, GN 00305.075 State Laws on Validity of Common-Law (Non-Ceremonial) Marriages <https://secure.ssa.gov/poms.nsf/lnx/0200305075> accessed 7 May 2017. See eg McCullon v McCullon (1978) 410 NYS2d 226 (Sup Ct Erie Cty) (New York residents who made frequent trips to Pennsylvania during which they held themselves out to be married to each other have a common-law marriage recognized in New York). There are likely several other states that also recognize common-law marriages valid in other states. See eg Atkinson v Valley National Bank of Arizona (1974) 526 P 2d 1252 (Ct of App Ariz). 15. See eg Unif Premarital and Marital Agreement Act 2012. 16. See eg NY Family Court Act, s 412. 17. Twila L Perry, ‘The Essentials of Marriage: Reconsidering the Duty of Support and Services’ (2003) 15 Yale J L Feminism 1. 18. The states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. See <https://www.irs.gov/publications/p555/ar01.html> accessed 7 May 2017. Alaska permits spouses to elect community property by executing a community property agreement. AS 34.77.030. 19. See eg Cal Fam Code, s 751 (‘The respective interests of the husband and wife in community property during continuance of the marriage relation are present, existing, and equal interests.’) 20. See eg NY Dom Rel Law, s 236B(1) (c) and (d). 21. See eg Conn Gen Stat, s 46b-81 (2015); Wash Rev Code Ann, s 26.09.080. 22. Cal Fam Code, s 2550 (‘Except upon the written agreement of the parties … in a proceeding for dissolution of marriage … the court shall … divide the community estate of the parties equally.’) 23. See eg NY Dom Rel Law, s 236B(5)(c). 24. See ibid, s 236B(6). (‘[I]n any matrimonial action the court may order maintenance in such amount as justice requires, having regard for the standard of living of the parties, established during the marriage, whether the party in whose favor maintenance is granted lacks sufficient property and income to provide for his or her reasonable needs and whether the other party has sufficient property or income to provide for the reasonable needs of the other …’). 25. See eg Cal Prob Code, s 6402. 26. See eg NY EPTL, s 4-1.1. 27. See ibid, s 5-1.1-A. 28. Oliver v Fowler (2007) 168 P 3d 348 (Wash). ‘We share earlier courts' distaste for the antiquated term with its negative connotations, and substitute the phrase “committed intimate relationship”.’ 29. Connell v Francisco (1995) 898 P 2d 831 (Wash). 30. Am Law Inst, Principles of the Law of Family Dissolution: Analysis and Recommendations, s 6.01 (2002). Factors to help determine whether a couple are sharing a life together as a couple are described in s 6.03 and include the existence of oral or written statements, promises or representations made to each other, whether they mingled their finances, whether their relationship fostered economic interdependence, and the emotional or physical intimacy of their relationship. 31. Am Law Inst, ibid, s 6.04. 32. ibid, s 6.05. 33. ibid, s 6.06. 34. Connell v Francisco (1995) 898 P 2d 831 (Wash). See also, Re Marriage of Lindsey (1984) 678 P 2d 328 (Wash), providing for an equitable division of property acquired by two individuals while in an intimate relationship prior to their marriage. 35. Eaton v Johnston (1984) 681 P 2d 606 (Kan); Dutton v Laine (2006) Kan App Unpub LEXIS 657 (2006). 36. Pickens v Pickens (1986) 490 So 2d 872 (Miss) (‘[U]pon permanent separation, our law authorizes and sanctions an equitable division of property accumulated by two … [cohabitants] as a result of their joint efforts.’); Shuraleff v Connelly (1991) 817 P 2d 764 (The court concluded that ‘the division of property here [between the cohabitants] should recognize the parties’ efforts over 15 years of cohabitation to build a future together based on the contributions of both’.) 37. Goode v Goode (1990) 396 SE 3d 430 (W Va). (‘Accordingly, we hold that a court may order a division of property acquired by a man and woman who are unmarried cohabitants, but who have considered themselves and held themselves out to be husband and wife.’) 38. See eg Levar v Elkins (1980) 604 P 2d 602 (Alaska Sup Ct); Marvin v Marvin (1976) 557 P 2d 106, 110 (‘The provisions of the Family Law Act do not govern the distribution of property acquired during a nonmarital relationship; such a relationship remains subject solely to judicial decision.’); Boland v Catalano (1987) 521 A 2d 142 (‘Cohabitation alone does not create any contractual relationship … or impose any other legal duties upon the parties.’); Davis v Davis (1994) 643 So 2d 931 (Miss) (‘Our legislature has not extended the rights enjoyed by married people to those who choose merely to cohabit.’); Williams v Ormsby (2012) 966 NE 2d 255 (Ohio does not permit a division of assets or property based on cohabitation). 39. See eg Traver v Naylor (1928) 268 P 75 (‘Future cohabitation is a vicious consideration, and, if it constituted any part of the consideration for the promise, the whole contract is void.’). 40. Some states still have laws that criminalize unlawful cohabitation and related activities. In Mississippi, for example, adultery, fornication, and unlawful cohabitation are crimes punishable by fines and imprisonment. Miss Code 97-29-1. In Michigan, lewd and lascivious cohabitation is a misdemeanor. MCL 750.335. Most of these types of laws have been repealed or declared unconstitutional. See eg State v Saunders (1977) 381 A 2d 333 (NJ 1977) (‘Fornication may be abhorrent to the morals and deeply held beliefs of many persons. But any appropriate ‘remedy’ for such conduct cannot come from legislative fiat. Private personal acts between two consenting adults are not to be lightly meddled with by the State.’); Martin v Ziherl (2005) 607 SE 2d 367 (State statute criminalizing intercourse between unmarried persons ‘is unconstitutional because by subjecting certain private sexual conduct between two consenting adults to criminal penalties it infringes on the rights of adults to engage in the private conduct in the exercise of their liberty under the Due Process Clause of the Fourteenth Amendment to the Constitution’.) 41. Marvin v Marvin (1976) 557 P 2d 106 (Cal). The Marvin decision did not result in a financial victory for Michelle Marvin, the plaintiff. The California Supreme Court decision permitted her to enforce an agreement between herself and Lee Marvin, but she was required to prove that the contract actually existed. This she was unable to do. Marvin v Marvin (1981) 122 Cal App 3d 871 (Cal Ct App). In 1976 she began a relationship with Dick Van Dyke that lasted until her death in 2009. Having learned her lesson, she and Van Dyke entered into a written agreement. Elaine Woo, ‘Micelle Triola Marvin Dies at 75; Her Legal Fight with Ex-lover Lee Marvin Added ‘Palimony’ to the Language’ Los Angeles Times, USA (31 October 2009) <http://www.latimes.com/local/obituaries/la-me-michelle-triola-marvin31-2009oct31-story.html> accessed 20 May 2017. 42. There were a few other decisions reaching similar results at about the same time as the Marvin decision. For example, the Michigan Court of Appeals in Tyranski v Piggins (1973) 205 NW 2d 595, leave to appeal denied, Tyranski v Piggins (1973) 389 Mich 793, recognized that a party to a meretricious relationship does not acquire rights in the property accumulations of the other party by reason of the relationship itself but, if there’s an express agreement to transfer property accompanied by an agreement to provide other consideration such as money or services including the performance of household tasks, the agreement can be enforced. In Latham v Latham (1976) 547 P 2d 144, which was decided a few months before Marvin, the Oregon Supreme Court enforced a property sharing agreement between unmarried cohabitants, the sole consideration for which was an agreement by one of them to provide the other with all the amenities of married life. 43. Re Estate of Roccamonte (2002) 808 A 2d 838. 44. Jones v Daly (1981) 122 Cal App 3d 500, 503 (The agreement between plaintiff and decedent was unenforceable because it showed that ‘plaintiff’s rendition of sexual services to Daly was an inseparable part of the consideration for the “cohabitors agreement,” and indeed was the predominant consideration’.). 45. Cook v Cook (1984) 691 P 2d 664 (An agreement to ‘pool their earnings and share equally in their joint accumulations’ is enforceable even though made in contemplation of a cohabitation arrangement because the mutual agreement to pool and share provided consideration that was independent of the cohabitation. The court did not decide whether the agreement would be enforceable if the only consideration was the performance of homemaking services.) 46. Poe v Estate of Levy (1982) 411 So 2d 253 (DC Ct of App Fl). 47. Glasgo v Glasgo (1980) 410 NE 2d 1325 (Ct App Ind). 48. Tyranski v Piggins (1973) 205 NW 2d 595, leave to appeal denied, Tyranski v Piggins (1973) 389 Mich 793. 49. Kozlowski v Kozlowski (1979) 403 A 2d 902 (Oral agreement by one cohabitant to support the other for life enforced). In Devaney v L’Esperance (2008) 949 A 2d 743 (NJ), the New Jersey Supreme Court extended the implied agreement basis for recovery to a plaintiff who had had a 20-year intimate relationship with the defendant but had never lived with him. The New Jersey legislature reacted in 2010 by enacting an amendment to its Statute of Frauds to require that ‘a promise by one party to a non-marital personal relationship to provide support or other consideration for the other party, either during the course of such relationship or after its termination’, must be in writing signed by the party against whom it is to be enforced and must be made with the independent advice of counsel for both parties. The effective date of the amendment was 18 January 2010. NJ Rev Stat (2013), s 25:1-5. This amendment has been held inapplicable to agreements entered into prior to the effective date. Maeker v Ross (2014) 99 A 3d 795. 50. Morone v Morone (1980) 413 NE 2d 1154 (oral agreement to enter into a partnership under the terms of which plaintiff would furnish domestic services, defendant would take care of business transactions, and that the net profits from the partnership would be used equally for the benefit of the two of them is enforceable); Ramos v Hughes (2013) 109 AD 3d 1121 (App Div 4th Dept) (unwritten domestic partnership agreement enforced). McCall v Frampton (1981) 81 AD 2d (2nd Dept) (Provisions of an agreement to provide services relating to public relations and promotion works could be severed from provisions in that same agreement that had an immoral objective with the result that the former could be enforced). 51. Suggs v Norris (1988) 364 SE 2d 159. 52. Watts v Watts (1987) 405 NW 2d 303; Re Estate of Steffes (1980) 290 NW 2d 697, 704–09 (‘If an express promise to pay is proved or a promise to pay can be implied from the facts, then the plaintiff is entitled to compensation regardless of the fact that she rendered services with a sense of affection, devotion and duty … [A] bargain between two people is not illegal merely because there is an illicit relationship between the two so long as the bargain is independent of the illicit relationship and the illicit relationship does not constitute any part of the consideration bargained for and is not a condition of the bargain.’)[multiple page gap between quotes so cannot be a single cite if there are two sentences. I put an ellipses in between the quotes and combined the pages in the cite.] 53. Thomas v LaRosa (1990) 400 SE 2d 809 (W Va). 54. Williams v Ormsby (2012) 966 NE 2d 255. 55. Schwegmann v Schwegmann (1983) 441 So 2d 316, 324 (La Ct App). (‘[T]he domestic services of child care, nursing, cooking etc., were inextricably interwoven with sexual domestic services in a concubinage relationship.’) 56. Rehak v Mathis (1977) 238 SE 2d 81. [deleted language was from the syllabus not the decision] The Rehak decision relied in part on the predecessor of OCGA, s 13-8-1 which provides that ‘[a] contract to do an immoral thing is void. If the contract is severable, however, the part of the contract which is legal will not be invalidated by the part of the contract which is legal.’ In Abrams v Massell, a decision reached 26 years later, a Georgia Court of Appeals enforced an agreement between two cohabitants not to change the bequests each had made to the other in his or her will without the consent of the other, noting that ‘fornication is no longer illegal since [the Georgia statute criminalizing voluntary unmarried intercourse] was found unconstitutional … [h]owever, as long as binding precedent from the Supreme Court of Georgia continues to define sexual relationships between unmarried consenting adults as immoral, we must set aside contracts under O.C.G.A. § 13-8-1 that are founded upon or that are in furtherance of such relationships’.(emphasis in the original) The court held that O.C.G.A., s 13-8-1 did not apply because any sexual conduct between the cohabitants was incidental to their agreement. The terms of the agreement referred only to their friendship, their desire to provide a comfortable home with shared expenses and support during life. The agreement also included the usual recital that the ‘agreement contains the entire understanding of the parties and that no representations or promises … have been made by either except as stated or contained in the …’ agreement. Abrams v Massell (2003) 586 SE 2d 435, 441 (Ct of App Ga). 57. See eg Hewitt v Hewitt (1979) 394 NE 2d 1204 (‘[P]laintiff’s claims are unenforceable for the reason that they contravene the public policy, implicit in the statutory scheme of the Illinois Marriage and Dissolution of Marriage Act, disfavoring the grant of mutually enforceable property rights to knowingly unmarried cohabitants.’) The Illinois Supreme Court recently affirmed this conclusion in Blumenthal v Brewer (2016) 69 NE 3d 834. See also Thomas v LaRosa (1990) 400 SE 2d 809 (W Va) (contract between unmarried cohabitants not enforced when party seeking enforcement knew the other party was married). 58. Restatement (Second) of Contracts, ss 4 and 19. 59. McLean v McLean (2010) 2010 Alas LEXIS 31; Cook v Cook (1984) 691 P 2d 664, 667 (‘[T]wo parties may by their course of conduct express their agreement, though no words are ever spoken.’); Marvin v Marvin (1976) 557 P 2d 106; Glasgo v Glasgo (1980) 410 NE 2d 1325 (Ct App Ind); Western States Construction, Inc v Michoff (1992) 840 P 2d 1220; Hay v Hay (1984) 678 P 2d 672; Re Estate of Steffes (1980) 290 NW 2d 697. 60. Western States Construction, Inc v Michoff (1992) 840 P 2d 1220, 1224. 61. Re Estate of Roccamonte (2002) 808 A 2d 838 (NJ); Kozlowski v Kozlowski (1979) 403 A 2d 902. But, as discussed in n 49, this ruling is no longer significant because the New Jersey Statute of Frauds now requires a written, signed agreement. 62. Morone v Morone (1980) 413 NE 2d 1154; Tompkins v Jackson (2009) 880 NYS 2d 876 (Sup Ct). 63. Featherstone v Steinhoff (1997) 226 Mich App 584. (No implied contract because ‘services rendered during a meretricious relationship are presumably gratuitous’.). 64. Restatement (Third) of Restitution & Unjust Enrichment (2011), s 28. The Restatements are a series of treatises, each covering a different area of the common law, published in the USA by the American Law Institute, an organization of judges, academics, and legal practitioners. The purpose of the treatises is to describe existing case law throughout the USA, show how the law is developing and, in some cases, to make recommendations as to future developments. Courts often cite to sections of the Restatements to support their decisions. 65. Restatement (Third) of Restitution & Unjust Enrichment (2011), s 27. 66. Restatement (First) of Restitution (1937). 67. ibid, s 40. 68. See eg Salzman v Bacharach (2000) 996 P 2d 1263 (Colo) (One cohabitant permitted to recover from the other his financial contributions and labour expended in renovating her home, reduced by the rental value for the period he lived in the home; Mason v Rostad (1982) 476 A 2d 662, 666 (DC Ct of App)(‘[O]n general principles of equity, the appellee is entitled to recover the funds he expended, the reasonable value of the work he performed and the services he rendered in renovating and improving the appellant’s real property reduced by the reasonable value of any counter-benefits received by him.’); Evans v Wall (1989) 542 So 2d 1055 (Ct App Fl 3rd Dist) (constructive trust imposed to reimburse one cohabitant for the capital, materials, and labor she invested in the other’s property’); Sullivan v Rooney (1989) 533 NE 2d 1372 (A constructive trust was imposed on property because it was reasonable for one cohabitant to rely on the other’s promise to transfer a one-half interest in their residence to her and, in reliance on that promise, she maintained a home for him); Cates v Swain (2013) 215 So 3d 492 (One cohabitant found to have been unjustly enriched by financial contributions made by the other to the acquisition of a home); Sharp v Kosmalski (1976) 351 NE 2d 721 (One cohabitant permitted to pursue a claim to recover title to farm he had conveyed to the other with the expectation that they would continue to live together until his death); Lauper v Harold (1985) 492 NE 2d 472 (Ct App Butler Cty); Watts v Watts (1987) 405 NW 2d 303 (If one cohabitant can show that the other accepted the value of her services ‘knowing that she expected to share equally in the wealth accumulated during their relationship …’, she should be able to recover based ‘on the moral principle that one who has received a benefit has a duty to make restitution where retaining such a benefit would be unjust’.); But see Blumenthal v Brewer (2014) 69 NE 3d 834, reaching a contrary result. 69. Abrams v Massell (2003) 586 SE 2d 435 (Ct of App Ga). 70. In Re Estate of Roccamonte (2002) 808 A 2d 838. 71. See eg NY CPLR, s 4519. 72. Ind Code (2011), s 34-45-2-4. 73. Estate of Catherine Hines (2014) Phila Ct Com Pl LEXIS 132. 74. Witt v Young (2012) 275 P 3d 1218 (Wash Ct App). 75. See generally William A Reppy, ‘Choice of Law Problems Arising When Unmarried Cohabitants Change Domicile’ (2002) 55 SMU L Rev 273. 76. References to the ‘Code’ refer to the Internal Revenue Code of 1986, as amended. 77. Gould v Gould (1917) 245 US 151 (‘Permanent alimony is regarded rather as a portion of the husband's estate to which the wife is equitably entitled, than as strictly a debt; alimony from time to time may be regarded as a portion of his current income or earnings …. The net income of the divorced husband subject to taxation was not decreased by payment of alimony under the court's order; and, on the other hand, the sum received by the wife on account thereof cannot be regarded as income arising or accruing to her within the enactment.’) 78. Code, s 71. 79. ibid, s 215. 80. ibid, s 1041. This section, enacted in 1984, changed the result reached by the Supreme Court in United States v Davis 1962, 370 US 65, which held that the transfer of appreciated property from one spouse to the other in satisfaction of marital rights should be treated for tax purposes in the same manner as any other transfer of property in satisfaction of a legal obligation. The Internal Revenue Service does not treat the release of marital rights as a recognition event for the releasing spouse. Rev Rul 67-221. 81. ibid, ss 2056 and 2523. 82. ibid, ss 2043(b)(2), 2053 and 2516. 83. Rev Rul 77-314. 84. Commissioner v Duberstein (1960) 363 US 278. 85. See generally, Debra Lefler, ‘“Keeping Books on Romance: The Gift Exclusion in Nonmarital Relationships’ (2011) 105 NWUL Rev 1739. 86. Gould v Gould 1917, 245 US 151, 153. 87. United States v Davis (1962) 370 US 65 (A taxpayer who transfers appreciated property in satisfaction of an obligation, recognizes gain). 88. The $14,000 annual gift tax exclusion and the $5,490,000 lifetime exemption amount are subject to adjustment for inflation. Code, ss 2503 (b)(2) and 2010(c)(3)(B). The $14,000 and $5,490,000 amounts are the amounts in effect for gifts made and decedents dying in 2017. Rev Proc 2016-55, 2016-45 IRB 707. 89. PLR 7921017; see also Commissioner v Beck’s Estate, 129 F 2d 243 (2d Cir 1942). 90. Wemyss v Commissioner (1945) 324 US 303 (1945) (Property transferred by one individual to another in exchange for a promise to marry is not a transfer for consideration in money or money’s worth); see also Fared-es-Sultaneh v Commissioner (1947) 160 F 2d 812 (2d Cir). 91. Code, s 2053(c)(1)(A). 92. Shapiro v United States (2011) 634 F 3d 1055 (9th Cir). 93. In states such as Illinois that do not enforce express contracts between unmarried cohabitants relating to property rights, the economically disadvantaged cohabitant could try to achieve some protection by persuading the other to establish and transfer property to trusts for his or her benefit. © The Author (2017). Published by Oxford University Press. All rights reserved.
Trusts & Trustees – Oxford University Press
Published: Feb 1, 2018
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