• Candace E. Duecker, CFP®, CDFA®, AFC®

Case Study - A Breakup that Resembled Divorce and How You Can Prevent the Same


More and more couples these days are delaying marriage to a later age, if deciding to marry at all. In turn, it is not unusual for these more enduring relationships to take on many marriage-like activities. Maybe you start sharing a bank account, buying things together, co-signing debts, sharing a lease or mortgage, or even putting each other’s names as beneficiaries of your estate, retirement accounts, and/or insurance policies.

Imagine these activities stretched over a 10-year relationship where you both expressed intention to get married though you never actually made it to the alter. There were some brief periods where you decided to take a break but you found your way back to each other until the one time you didn’t. You broke up for good. Time seems to crawl as you try to mend your broken heart but you make strides in moving on. One month morphs to the next and before you know it, almost a year has passed. You make a career change that reinvigorates your passion and you finally start to envision a life without your ex.

Then you get served. But not the fine glass of champagne you’d like to partake in celebration of your next chapter. You get a Petition of Dissolution and see that your ex of nearly a year is suing you for half of your assets. As soon as possible, you engage legal counsel and later in your process you cross paths with me, a Certified Divorce Financial Analyst® professional. Your case is well supported by your team but the proceedings are demanding. Emotionally, it’s exhausting as you are forced to relive a decade of what didn’t work in your relationship. It’s mentally draining and time consuming as you must dig through your financial history to prove values of your assets past and present, sources of funding, and what was separate property versus community property. Spiritually, you struggle with the reconciliation of how someone can even do this. And financially speaking, you end up forking over 5 digits worth of your own money toward legal and court expenses. It’s important to note, unlike a divorce, because you were never married, one party cannot claim legal expenses from the other.

Mediation is unsuccessful and short-lived and the litigation roller coaster takes many twists and turns for almost two years before you begin departing the ride. Much to your chagrin, it is ruled that regardless of the property’s title, or source of payment to purchase it, your ex is entitled to 30% of the property you acquired over the course of your relationship. The judge nets out some liabilities and a few other items but ultimately, you end up being responsible for a substantial financial transfer to your ex. The property to be transferred includes many other items, notably 30% of the equity in your home (even though you owned the home independently) as well as growth and contributions of your retirement portfolio during your relationship. You are given the option to appeal but it is an expensive gamble that you choose not to pursue. The judge gives you one year to complete the transfer adding yet another financial burden as now you need to ascertain your source of payment and add another challenging timeline to your case.

The judge explains that after thorough examination, your relationship demonstrated enough support to qualify as a CIR (Committed Intimate Relationship) in Washington State, formerly known as meretricious relationships. Many states have variations on what this means and how it is labeled (some states refer to this as Common Law) but for Washington State purposes, the following 5 factors are considered when determining if CIR doctrine applies to a couple:

1. Continuous cohabitation;

2. Duration of the relationship;

3. Purpose of the relationship;

4. Pooling of resources and services for mutual benefit;

5. Intent of both parties.

So how do you protect your interests during a relationship that could be subject to CIR doctrine (or Common Law in other states)?

Consider entering into an agreement commonly referred to as a Cohabitation Agreement. Generally speaking, this type of agreement is designed to govern the rights between the couple during the relationship along with the individual interests should the relationship dissolve. In addition to protecting separate property interests, these agreements are especially important if either party is bringing children into the relationship or caring for other dependents. Cohabitation Agreements often incorporate important details on property ownership, assets and financial liabilities, and any other matters that are important to the couple. It is a legal document; therefore, I recommend that any Cohabitation Agreements be drafted by an attorney to reduce potential future challenges to the validity, and ensure enforceability as intended.

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©2017 SoulFINANCIAL LLC

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