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Here's everything you need to know about common law marriage.

Common law marriage status can still apply to couples in states across the U.S. that recognizes many similarities to a typical marriage without the official legal document.  Understanding what constitutes a common law marriage is important from a legal and financial perspective if you’re pooling assets ofr sharing the responsibility for debts. Here’s a breakdown of what a common law marriage is and how it could affect your finances. You can also work with a financial advisor to help you plan out your finances if you have a significant other that you plan on living with.

What Is a Common Law Marriage?

A common law marriage is a marriage that hasn’t been finalized with a formal ceremony and marriage license but is recognized by the state in which a couple lives. To be in a common law marriage, there are certain conditions couples need to meet. Generally, a couple could be considered common law married if they:

  • Are 18 years old or older and of sound mind
  • Live together and have done so for a significant amount of time
  • Assume the other’s last name
  • Own property together, such as a home or car
  • File joint tax returns
  • Share joint bank accounts
  • Have joint debts, such as credit card accounts
  • Refer to one another as the other’s spouse
  • Share in household expenses
  • Have children together

Common law marriage status isn’t automatic. Most importantly, the state that the couple lives in has to recognize it.

Which States Have Common Law Marriage Rules?

Here's everything you need to know about common law marriage.

As of 2022, only a select number of states fully recognize common-law marriages. Those include:

  • Colorado
  • Iowa
  • Kansas
  • Montana
  • New Hampshire (for inheritance purposes only)
  • Oklahoma
  • Rhode Island
  • South Carolina
  • Texas
  • Utah
  • District of Columbia

A few other states will recognize common law marriages that were formed prior to when the rule was eliminated in that state. However, those states do not recognize new common-law marriages. These states include:

  • Alabama (for common law marriages established before Jan. 1, 2017)
  • Georgia (established before Jan. 1, 1997)
  • Idaho (established before Jan. 1, 1996)
  • Ohio (established before Oct. 10, 1991)
  • Pennsylvania (established before Jan. 1, 2005)

Financial and Legal Rights of Common Law Couples

If you live in a state that recognizes common law marriage and you meet the state’s definition of being common law married, your relationship status is as legally binding as a traditional marriage. That means that you remain common law married until one of you passes away or you seek a divorce. Being married under common law entitles couples to certain financial benefits that legally married couples also can enjoy.

  • Social Security Benefits: Common law couples are eligible to receive one another’s Social Security benefits following spousal benefit rules. To qualify, couples need to prove the number of years they’ve lived together under their state’s common law rules.
  • Employer Benefits: Common law couples can also take advantage of employer benefits offered to spouses. For example, if your common-law spouse has health insurance at work and you don’t, you could legally get coverage under their plan.
  • Tax Benefits: Common law status entitles you and your spouse to claim certain tax deductions that apply to married couples. For example, if you own a home together and file a joint return you could claim a deduction for mortgage interest. You could also claim relevant deductions or tax credits if you have children together.
  • Estate Planning Benefits: The gift tax exemption that applies to legally married couples also applies to common-law spouses. Common law spouses can claim unlimited marital exemptions for estate planning purposes, up to the federal estate tax limit. They can also inherit property from one another, assuming there’s a valid will in place. If a common-law spouse passes away without a will, their property would be distributed according to the inheritance laws in their state.
  • Medical Decision-Making: Common law couples also have the ability to establish a medical power of attorney. This allows one spouse to name the other as the person responsible for making medical decisions on their behalf in situations involving incapacitation.

Potential Financial Impact of Common Law Marriage

Here's everything you need to know about common law marriage.

While having a common law marriage can help couples in some ways, it can potentially hurt them in others. First, being in a common law marriage doesn’t automatically grant you rights to any property your spouse owns if your name isn’t on the deed. For example, the two of you might own a home together, but if your common law spouse buys an investment property, you’d have no legal or financial rights to it if they don’t add your name to the deed.

Ending a Common Law Marriage

Common law marriage can also get tricky if you decide to end the relationship. Even though you don’t have a formal marriage license, you still need to legally end a common law marriage. That means disentangling yourselves financially if you share property, bank accounts or other assets.

While ending a common law marriage is typically easier than ending one that’s been formally recognized, it would still need to involve the courts. You and your former spouse would each have to make a case for how any shared property should be divided. It’s important to be aware of problems that could come if both your names are attached to a mortgage or car loan but only one person’s name is on the deed or vice versa.

Estate Planning With a Common Law Marriage

It’s important to manage your estate plan as a common law couple to make sure both spouses are legally protected if the other passes away. At the very least, you should have a will to make sure that your spouse receives the assets you’d like them to inherit if something happens to you.

If you have substantial assets together, you might want to take the additional step of setting up a living trust. You and your spouse can both act as trustees. The other advantage is that property held in a will is subject to the probate process, while property held in a trust is not.

The Bottom Line

Common law marriage isn’t something to be entered into lightly, but it’s important to understand. Talking over the financial benefits and pitfalls can help you and your significant other decide if it makes sense for your relationship. You can take all of the financial implications into account from insurance to estate planning.

Financial Tips for Couples

  • A financial advisor could help you manage investments both individually and as a couple. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Consider whether you plan to eventually get married. If not, you may be better off not entering a common law relationship. It may also be wise to draw up an agreement about living together. This could help protect you legally and financially if you decide to buy property together or share bank accounts.

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Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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