How Common-Law Marriage Affects Your Finances

Quick Answer

Common-law marriages allow some long-term couples to be recognized as legally married in certain states, even without a formal wedding. While this recognition provides some of the same benefits as traditional marriage, it lacks some rights and can create financial and legal murkiness if the couple doesn’t document and plan carefully.

Two wedding bands standing upright in sand.

In some states, couples in long-term relationships who don't officially wed can choose to gain recognition as common-law marriages.

If you're in a common-law marriage, you do have some of the same financial rights as your traditionally wed peers, and you don't have to deal with some of the rules and expenses that come with formal marriage. However, there's more room for confusion and fewer built-in protections, so it's critical to know the laws and take steps to protect yourself, your loved ones and your money.

What Is Common-Law Marriage?

A common-law marriage is an informal marriage that is recognized legally in some states as a formal one. In other words, it's a couple who didn't have a wedding ceremony or obtain a marriage license, but live together as life partners and view themselves as married.

To be in a common-law marriage in one of the states that recognizes it, couples must meet certain criteria that demonstrate mutual intent to be a permanent married couple. Contrary to popular belief, it's not the number of years living together that defines such an arrangement.

Instead, intent can be shown through actions such as cohabitating, presenting to the public as spouses and filing a joint tax return. There are also some basic requirements, such as the individuals being of legal age and sound mind, and not married to someone else. There's not a minimum for how many qualifications you must meet, though a judge gets the ultimate say if your relationship status is in question.

Some states previously allowed common-law marriages, and while they no longer do so, they still recognize ones that formed prior to their prohibition. Additionally, even states that don't permit common-law marriages to form there will recognize common-law marriages from other states.

The only states that currently allow the formation of a common-law marriage, according to NOLO, are:

  • Colorado
  • District of Columbia
  • Iowa
  • Kansas
  • Montana
  • Oklahoma
  • Rhode Island
  • Texas
  • Utah

Laws are always changing, and some states don't explicitly allow or ban common-law marriages, so it's worth checking your state's current laws.

Common-law marriages typically only end when one spouse dies or the couple goes through a formal divorce like any traditionally married couple. You read that right: Despite not having a wedding ceremony, common-law marriages are legally acknowledged, and they usually require legal dissolution in the form of a traditional divorce.

However, some state laws allow a common-law marriage to be invalidated after a period of separation. For example, in Texas, if a couple doesn't file formal divorce papers within two years of separation, the state presumes the common-law marriage never existed. It's best to consult with an attorney in your state to ensure you know the ins and outs of the laws that apply to you.

What Are Your Financial Rights As a Common-Law Couple?

If you live in a state that does recognize common-law marriages, you do get some of the benefits and rights that traditionally married couples do. However, given that common-law marriages are less easily defined and can leave some financial and legal issues in question, experts often recommend couples get legally married if they're able to.

While laws can vary by state, couples who are considered common-law married are typically eligible for most of the same benefits as legally married couples. You may be required to prove to a judge that you are common-law married to obtain them. These benefits include:

  • Social Security Survivor benefits
  • Spousal pension benefits
  • Insurance benefits
  • Tax benefits, such as no estate tax on inheritance
  • Inheriting assets when one spouse passes away

However, common-law couples aren't eligible for other rights. Only legally married couples are guaranteed to have:

  • Rights protecting a family residence: In other words, if one common-law spouse is the only owner of a house that the couple shares together, the other spouse isn't required to consent to the house being mortgaged or sold.
  • Rights to dividing family assets: In addition to a common-law spouse not having to get permission to sell a home, they aren't required to split proceeds.
  • The right to make medical or inheritance decisions: It's possible your spouse's family can exclude you, unless you have paperwork otherwise designating you.

Important Financial Steps to Take as a Long-Term Couple

If you're planning to be in a common-law marriage, there are steps you can take to ensure you protect your relationship and finances.

Since there's not a hard-and-fast rule on what makes a common-law marriage, legal experts recommend couples who want to be in a common-law marriage to write, sign and date a statement saying they do intend to be married. Conversely, if you explicitly do not want to be common-law married and subject to having to formally divorce down the road, it might be helpful to write and sign a statement stating that you don't intend to be married.

Having documentation stating your intentions either way can help avoid confusion and issues if life circumstances change. It's wise to document anything else that could pose confusion later. For example, if you buy a home together and intend to own it equally, you may want to draw up a co-ownership agreement so both partners are listed on the deed.

Any long-term, permanent union—whether legally married or common-law married—benefits from drawing up legal estate planning documents. These specify your wishes for your health decisions, money and assets should you become incapacitated or die. Not only do these documents provide clarity, but they ensure your partner and children will play the roles you desire and receive what you intend for them.

Due to the murkiness of determining a common-law marriage, couples in long-term relationships especially benefit from drawing up estate planning documents, such as:

The Bottom Line

Moral of the story? Common-law marriages are loosely defined and vary by state, so if you choose to enter into one, it pays off to be organized with your finances. This means enshrining your marital intentions on paper, drawing up agreements if you buy shared property together and creating estate planning documents. Should anything happen to you, your partner or your children, having everything set up and documented will help ensure your finances and future are protected.