Marrying for financial reasons was already ancient when Jane Austen wrote Pride and Prejudice, where Ms. Eliza Bennet first realized she loved Mr. Darcy when she laid eyes on his “beautiful grounds at Pemberly.” Marriage for money was still everywhere when George Bernard Shaw commented on it less flatteringly a century ago in Mrs. Warren’s Profession. And indeed, marriage for money remains a common feature of the modern romance novel: the attractive male lead with rippling muscles happens to be independently wealthy, whether a “Mr. Big” or a rich firefighter or police officer.
This fictional narrative mirrored reality. Not long ago, marriage was the primary means by which half our population achieved financial security.
But it is not as important financially as it once was. Today, young women are no longer socially prohibited from having jobs. This change from a state of affairs profoundly absurd to today’s at least aspirational meritocracy is one of the biggest and most important changes in the last century. And it has had some effect on the financial implications of marriage—for example, many victims of domestic violence do not face financial ruin as a necessary side-effect of leaving bad relationships or seeking protection for their children.
But there are still financial and legal reasons to marry earlier than we otherwise would.
States offer people special rights over the property of their spouse. In some states this may be limited to claims of “maintenance” on divorce and rights to a portion of a spouse’s estate (regardless of what their will says) on their death. While even these financial rights are important in case of accident or early death, spousal property rights in Washington are even stronger.
Washington is a “Community Property” state. That means that everything you and your spouse earn during your marriage is actually half-owned by each of you, regardless of what name is on a bank account or who did the work that brought in the money. This is a perfectly reasonable way of arranging affairs (after all, spouses work together to raise and provide for children and one shouldn’t be penalized in terms of their ownership of assets because they are working to raise the children). But it does mean that an unmarried couple has less protection in the event of a break-up.
Notice I said less protection, not no protection. Washington also recognizes “Committed, intimate relationships” (CIRs) as forming a community like a marital community. These used to be called meretricious relationships until the courts looked up what meretricious meant—it turned out to be unflattering and not at all reflective of the very serious and committed relationships which many unmarried young adults form these days.
An unmarried couple in a serious relationship still needs to talk to lawyers about their property or their break-ups. “Cohabitation Agreements,” which I think of as “DTR” or “Define-the-Relationship” agreements, are reasonable for any practical couple. They reduce the stress and pain and uncertainty of a break-up. What’s more, even if a couple does not get a cohabitation agreement, they should take their committed intimate relationship into account when preparing their estate plan.
However, parties to a CIR do not get all the same rights as a couple. Notably, the surviving partner does not take a share of the deceased partner’s separate property under the laws of intestate (i.e. without-a-will) succession. What’s more, the ambiguity of a Committed Intimate Relationship makes it more difficult to determine which assets are separate property, since it is often unclear when a CIR began or whether the parties even intended to be in a CIR.
Rights to Visit in Hospital and to Make Medical Decisions
During the debate about the legalization of same-sex marriage, one of the most obvious injustices perpetrated by its illegality was the inability of a partner to visit in hospital or to make medical decisions for a person they had loved and shared a life with for decades. Although these couples were legally unable to marry at the time, unmarried couples (regardless of their sexual orientation) can still face these issues today.
In Washington, RCW 7.70.065 provides that if a patient is unable to make their own medical decisions, the order of people able to make the decisions is as follows: appointed guardian, person with a durable power of attorney for health care decisions, the patient’s spouse, adult children, parents, and finally adult siblings. The spouse is the default decision-maker, while an unmarried partner does not have that power.
(There is an exception for the rare state-registered domestic partnership, a relationship that is largely obsolete now that marriage for same sex couples is available).
While there are legal ways for a partner to gain decision-making ability—a power of attorney for health care decision-making being the easiest—the fact is that both the law and social norms still create different expectations for a married couple than for an unmarried couple, and these can be a barrier that makes treatment of a loved one far more difficult than it should be.
The Unlimited Spousal Deduction
For wealthy individuals and couples, the unlimited spousal deduction is wonderful. Washington State death taxes kick in at a little over two million dollars, but the spouse of a high-income professional isn’t going to lose the family home when the first spouse dies, mostly because nobody wanted to force widows to pay the government tax on their husbands’ deaths.
This kind of treatment is avoided as a policy matter, since it would be normatively undesirable (i.e. “mean”) to enforce in most cases, even though it creates massive tax loopholes for some couples. Consider President Trump’s twenty-four year age difference with the First Lady: by marrying a younger woman, he has effectively delayed his death taxes by decades.
However, the ability to leave large amounts of money tax-free to a spouse is also critical if you want your spouse to be able to keep living in her home for a long time. The second spouse to die may outlive the first spouse to die by decades (even when the age difference between spouses is not great). Expenses add up quickly in retirement. Even if you have three million dollars when you die, an extra hundred thousand for your spouse could keep her from having to abandon her home at ninety-two.
Spousal Rights to Retirement Plans
For a more common benefit (and cost) to marriage, consider rights to retirement plans. ERISA-governed plans in particular have very strong protections for spouses, who must explicitly waive their right to be a beneficiary of a retirement plan if you want to designate someone else. This amounts to a financial privilege given to a spouse which an unmarried partner does not get—a privileged status against the failure of a wage-earner to update their beneficiaries when they married you or against their desire to disinherit you and give money to their parents or mistress. Effectively, it is a protection for a spouse who may be reliant on the other spouse for support (as was historically the case). An unmarried partner lacks this protection.
In a community property state the related issues grow more complex, because while ownership of certain retirement plans such as ERISA-governed 401(k)’s is preempted by federal law, ownership of IRAs is not preempted by federal law, even though federal law means that a person with a community property interest in another’s IRA does not have full classic “ownership” or the IRA. Instead, the IRS treats distributions from the IRA—including distributions to an IRA in the name of the co-owner—as taxable to the participant.
IRAs also come with a powerful tool for spouses: the spousal rollover allows spouses to roll over IRAs of a deceased spouse into an IRA in their own name and treat it as their own IRA. Depending on the age at death of the first spouse to die, this may allow you to delay distributions or reduce the required minimum distributions each year, which defers taxes and therefore saves money. While this tool is unavailable for some kinds of retirement accounts, it is a frequently useful tax strategy that is unavailable to unmarried partners.
While there are many advantages to marrying early, it is worth noting that there are also risks. Marriage affects your property rights and makes you more likely to go through a bitter division of assets if you break up—many unmarried couples are not even aware of their legal rights to property division and do not go through it.
What’s more, they don’t usually title as many assets jointly, need to file as much paperwork to divide assets, or file legal papers to end the relationship. This makes them far less likely to even consult a lawyer, much less to spend time fighting each other.
Thus there is also some reduction in risk both from the “security through obscurity” that is the couple’s ignorance of Washington Law and from more of a “security through procrastination” benefit in that the fact that a couple isn’t legally forced to deal with the status of their property on the termination of a relationship in which they are unmarried.
(Prenuptial, postnuptial, or cohabitation agreements can also be used to help mitigate these risks, and do so more reliably.)
There are also some hidden tax benefits to being unmarried. While beyond the scope of this article, one obscure example that comes to mind is that if one member of an unmarried couple ever assists with the care of their partner’s relatives, payment for the care might be deductible. Contrariwise, if they were married and the caregiver were an in-law, then the deduction would ordinarily be disallowed.
Also, the process of divorce can be extremely messy and expensive, especially if the other party is vindictive or even just unresponsive. Even for a marriage that lasts a month where almost no assets are involved, it can take a year to get a divorce completed. This is not only a huge waste of everyone’s time and money, it is often psychologically unhelpful to everyone involved.
Although marriage for money is far less important than it was a century ago, marriage itself still has many profound financial and legal consequences. Married and unmarried couples alike should learn about those consequences and do what they can legally to accomplish the results they would want, rather than leaving these issues unexplored until it’s too late and letting default government rules control.
After all, it would be a shame if Eliza Bennet’s mother were to make her medical decisions and Mr. Darcy’s beautiful estate at Pemberly passed to Mr. Wickham.
Tom White writes “A Little Deathy.” He is Attorney/Owner of King County Business Law in Seattle, Washington, and the pseudonymous author of UN-acclaimed anti-human-trafficking novel River of Innocents. He is an Eagle Scout and recipient of the Order of the Arrow’s Vigil Honor, and he volunteers at the Housing Justice Project. A graduate of Williams College and Georgetown Law, he can occasionally be spotted in the wild at Seattle coffee shops.
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