Home Ownership for Unmarried Couples

There are special legal and financial issues to consider.

Homeownership has always been considered part of the American Dream. For many couples—whether married or unmarried—a key component of building a life together is attaining and maintaining a home. But in some cases, that dream may start to crumble if unexpected issues like death or disability occur. With that in mind, it is critical to put precautions in place that will protect both parties under a wide variety of circumstances.

Risks to Your Home Sweet Home

Unfortunately, fire, natural disasters, and theft aren’t the only risks that you can face with your home. In fact, some relationship perils could actually pose more of a threat to the home that you and your partner reside in together. These risks can include:

  • Death of a partner
  • Disability or incapacity of a partner
  • Ending of the relationship

While nobody likes to think about it, unexpected situations can and do occur, so it is essential that you are prepared legally and financially to protect your home and each other—especially during an emotionally difficult time.

For example, today many households have two income earners, and the loss of one of these income streams due to death or disability can make it difficult or impossible for the survivor or healthy partner to pay for housing costs and other essential living expenses.

In addition, if one partner becomes ill and requires financial assistance from Medicaid, this could have implications for the home. For example, there is a home equity limit of $713,000 (in 2024) in order to exempt a Texas home from the assets that Medicaid has access to if there is no spouse living in the home. (Source:

Plus, even if the home is exempt from Medicaid’s asset limit, it may not be exempt from the Medicaid Estate Recovery Program. In this case, following the death of a Medicaid recipient, the Texas Medicaid agency will attempt to obtain reimbursement for its costs of care from the remaining assets of the decedent, including his or her home. (Source: Without protections in place, this situation could force the surviving partner to move out of the home.

So on a short-term basis, such as a health condition that is just temporary, it may be possible to cover your housing costs using money from an emergency fund. However, in case of death or long-term incapacity, one should have other precautions in place.

It is also possible that, in the event of one partner’s death, his or her blood relatives may take over ownership of the property, based on the laws of inheritance. This could pose a significant threat to the surviving partner who risks losing his or her home.

If your relationship ends, you’ll need to decide what to do about your home—whether one of you will remain there, and if not, how to go about moving forward.

Separately, cases where there is a significant age difference between partners could also pose some challenges. For instance, in Texas, homeowners who are age 65 and older may qualify for an additional homestead exemption of $10,000. This is in addition to the homestead exemption that all homeowners in Texas can receive. Those who are partial owners may also qualify for this exemption.

If a homeowner is over age 65 when they pass away, their surviving spouse can receive the exemption, provided that they are age 55 or older. This is not necessarily the case for an unmarried surviving partner, though. You must apply with the county appraisal district to receive the homestead exemption in Texas. Survivors should complete Texas Comptroller Form 50-135 to apply.

When married couples get divorced, they typically have several options available, such as:

  • One spouse buying the other out
  • Selling the home and then splitting the profit

Often, a divorce court will mediate a decision.

But for unmarried couples who separate, things are handled differently. For instance, if both partners have equal legal ownership (i.e., if both names are on the home’s title), then both must agree to sell the property, regardless of how much either of the parties contributed to the purchase and other expenses.

If one of the partners decides to instead buy the other out, the transfer could cause taxation for unmarried individuals. (This is not the case with married couples, as the transfer of assets between the parties in a divorce is usually tax free.)

Legal and Financial Protections

In addition to obtaining homeowners insurance to help ease the financial consequences of damage or theft, there are other things you should have in place to protect yourself and your partner from financial devastation in case of death, incapacity, or the end of your relationship.

These protections should include:

  • Life Insurance – The proceeds from a life insurance policy are received income-tax free by the beneficiary. These funds could be used to pay off a remaining mortgage balance or to replace the deceased’s income, in turn reducing the financial stress of home-related expenses for the surviving partner.
  • Disability Insurance – The income from disability insurance could be used to help pay housing expenses if one partner becomes injured or ill and is unable to work. Depending on the policy, the benefits may pay out for a set time period, such as 5 or 10 years, or until the insured is age 65.
  • Long-term Care Insurance – If one partner requires long-term care services, either in a facility or at home, the benefits from a long-term care insurance policy could help to pay for some or all of the care, while preserving your other assets.

If you and your partner are planning to purchase a home together, putting an agreement in writing is a must for protecting yourself and making sure that the property is divided fairly in the event of a future breakup.

This “cohabitation agreement” should ideally cover:

  • What happens to the home in the event of a breakup
  • The percentage of profits each partner will receive upon the sale of the home
  • Type of ownership on the home’s deed or title
  • How housing expenses will be shared
  • Dispute resolution process in case of a split

If one partner already owns a home and the other moves in, an agreement could also be drawn up that clarifies all of the above, as well as an accounting of how much money was put into the home by the partner who originally purchased it.

Retitling the home to either “joint tenants” or “joint tenants with rights of survivorship” could also be an option to protect unmarried partners who own a house. Going this route can allow the property to bypass probate if one partner passes away.

Protection from Unseen Dangers

To make sure that you haven’t left any legal or financial gaps in your plans to protect your home, talking with a financial-planning professional can help. This can also help you to better anticipate the potential tax, legal, and financial consequences you’ll have, and put a plan in place to protect yourself and your partner. Working with a professional who is also well-versed in LGBTQ legal issues can help you keep up-to-date on the changing landscape of same-sex marriage laws.

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Grace S. Yung

Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston and was recognized as a “Five-Star Wealth Manager” in the September 2017 issue of Texas Monthly.
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