Unmarried in South Dakota: What Happens to Your Assets If You Split?

Navigating Unmarried Partnerships: The Power of Cohabitation Agreements in South Dakota

In South Dakota, committed relationships often take various forms beyond traditional marriage. For many couples choosing to live together without tying the knot, understanding their legal standing and protecting their individual and shared interests is paramount. Unlike some states, South Dakota does not recognize common-law marriage (SDCL § 25-1-1). This crucial legal distinction means that unmarried partners, regardless of how long they live together or how they present themselves to the public, do not automatically acquire the legal rights and responsibilities typically associated with marriage upon separation. This is precisely where a Cohabitation Agreement becomes an indispensable tool for clarity, protection, and peace of mind.

A Cohabitation Agreement, often referred to as a "Living Together Agreement," is a legally binding contract between two individuals who live together or plan to live together but are not married. It serves as a roadmap for how financial and property matters will be handled during their relationship and, critically, what will happen if the relationship ends. Think of it as a proactive measure, much like a prenuptial agreement, but designed for unmarried couples. Its purpose is to define expectations, prevent future disputes, and provide a clear framework for resolving issues without costly and emotionally draining litigation.

Why a Cohabitation Agreement is Essential in South Dakota

Given South Dakota's strict stance against common-law marriage, unmarried partners who separate face significant legal challenges without an agreement. Without one, property accumulated during the relationship, debts, and other financial responsibilities are typically treated under general contract law, real estate law, or principles of equitable ownership, which can be complex, expensive, and unpredictable to untangle. A Cohabitation Agreement preempts this uncertainty by establishing clear rules agreed upon by both parties while the relationship is strong.

What Can a Cohabitation Agreement Cover?

A well-drafted Cohabitation Agreement can address a wide array of financial and property matters, providing clarity and protection for both partners. While not exhaustive, here are some common areas:

• 🏡 Property Ownership and Division: This is often the cornerstone of the agreement. It can specify how real estate (e.g., a jointly purchased home), vehicles, bank accounts, investments, and other significant assets will be owned, managed, and divided if the relationship ends. It can clarify who contributed what to the down payment or mortgage and how equity will be split.
• 💰 Financial Contributions and Expenses: The agreement can outline how household expenses (rent/mortgage, utilities, groceries, insurance, etc.) will be shared. It can also detail contributions to joint accounts, savings, and investments.
• 💸 Debt Allocation: Clarifying responsibility for joint debts (like mortgages or car loans) and individual debts (student loans, credit card debt acquired before or during the relationship) is crucial.
• 📈 Future Acquired Property: The agreement can define whether property acquired during cohabitation will be considered joint property or remain separate property, even if acquired using shared funds.
• 🗓️ Financial Support (Limited Circumstances): While it cannot create "alimony" as known in divorces, an agreement can specify limited financial support or compensation to one partner under certain conditions, such as if one partner gave up career opportunities to support the other's education or career, or if there were unequal financial contributions to joint assets. This must be carefully drafted to be enforceable.
• 🐾 Pet Ownership: For many, pets are family. The agreement can specify who will retain primary ownership and responsibility for pets upon separation.
• 📜 Estate Planning Considerations: While not a will, the agreement can reference and encourage the creation of wills, trusts, and power of attorney documents that align with the partners' wishes for each other.
• 🛠️ Dispute Resolution: Parties can agree on a method for resolving disputes that may arise from the agreement, such as mediation or arbitration, before resorting to court.
• 🚗 Vehicles and Other Valuables: How cars, boats, art, or other significant personal property will be owned and divided.

What Cannot a Cohabitation Agreement Cover?

It's equally important to understand the limitations of a Cohabitation Agreement in South Dakota:

• 👧 Child Custody and Visitation: Courts in South Dakota retain exclusive jurisdiction over matters concerning children's best interests, including custody, visitation, and child support. An agreement cannot predetermine these issues. While it can address financial contributions towards a child's upbringing, it cannot dictate custody arrangements.
• 💍 "Alimony" or Spousal Support: As common-law marriage is not recognized, an agreement cannot create an entitlement to ongoing spousal support in the same way a divorce court might award alimony. Any financial support provisions must be carefully structured as a contractual obligation rather than spousal maintenance.
• 🚫 Against Public Policy: Any clause that is illegal, encourages divorce, or is otherwise contrary to public policy will be unenforceable.
• ⚖️ Unconscionable Terms: An agreement that is extremely unfair or one-sided at the time it was made may be challenged and potentially invalidated by a court.

Legal Requirements for Validity in South Dakota

For a Cohabitation Agreement to be legally enforceable in South Dakota, it generally must meet the requirements of a valid contract. Key considerations include:

1. 📝 In Writing: The agreement must be written and signed by both parties.
2. 🤝 Voluntary: Both parties must enter into the agreement freely and voluntarily, without duress, coercion, or undue influence.
3. 🔎 Full Disclosure: Both parties must provide full and honest disclosure of their assets, debts, and income. Hiding financial information can invalidate the agreement.
4. 👨‍⚖️ Independent Legal Counsel: While not strictly required by law, it is highly advisable for each partner to have their own independent attorney review and advise them on the agreement. This ensures both parties fully understand their rights, obligations, and the implications of the agreement, significantly strengthening its enforceability.
5. 🧠 Capacity: Both parties must be of sound mind and legal age (18 or older) when signing.

Benefits of Having a Cohabitation Agreement

The advantages of a Cohabitation Agreement extend beyond legal protection, offering significant relational benefits:

• ✨ Clarity and Predictability: It eliminates ambiguity about financial responsibilities and property rights, fostering open communication and reducing misunderstandings.
• 🛡️ Asset Protection: For individuals entering a relationship with significant pre-existing assets, or those with children from previous relationships who want to protect their inheritance, the agreement provides clear boundaries.
• 💵 Avoids Costly Litigation: Without an agreement, separating unmarried partners often face contentious legal battles to divide property and debts, which can easily incur legal fees ranging from $10,000 to $50,000 or more depending on the complexity and duration of the dispute. An agreement provides a pre-determined, cost-effective resolution.
• Peace of Mind: Knowing that a plan is in place for unforeseen circumstances can reduce stress and allow partners to focus on building a healthy relationship.
• ⚖️ Fairness and Equity: It allows partners to define what "fair" means to them, rather than relying on a court's interpretation which may not align with their intentions.

Risks of Not Having One

Ignoring the need for a Cohabitation Agreement in South Dakota can lead to severe consequences:

• 🌪️ Protracted and Expensive Legal Disputes: Without a contract, courts must apply general legal principles, leading to lengthy and costly battles over who owns what and who owes whom.
• ❓ Uncertain Outcomes: The outcome of property division without an agreement is highly unpredictable, leaving partners vulnerable to unfavorable rulings.
• 💔 Emotional Distress: Legal battles are inherently stressful, and the absence of clear guidelines can turn a separation into an acrimonious and emotionally draining ordeal.
• 🚫 Lack of Financial Support: Unless a specific contractual agreement exists, there is no legal basis for one partner to claim financial support from the other in South Dakota upon separation.

Steps to Take to Create a Cohabitation Agreement

1. 🗣️ Open Communication: Discuss with your partner the idea of a Cohabitation Agreement. Be open and honest about your financial situations and expectations.
2. 📋 Gather Financial Information: Compile a comprehensive list of all assets (bank accounts, investments, real estate, vehicles, retirement accounts, etc.) and debts (credit cards, loans, mortgages) for both parties.
3. 👨‍⚖️ Consult Independent Attorneys: This is arguably the most critical step. Each partner should hire their own attorney specializing in family law. Your attorney will explain your rights, advise you on fair terms, and ensure the agreement is legally sound and enforceable in South Dakota.
4. 📝 Drafting the Agreement: Your attorneys will work together to draft an agreement that reflects your mutual intentions and complies with South Dakota law.
5. ✍️ Review and Sign: Carefully review the final draft with your attorney. Once both parties are satisfied and fully understand the terms, sign the document in the presence of a notary public.
6. 🔄 Periodic Review: Relationships evolve, as do finances. It's wise to review the agreement periodically (e.g., every few years or after significant life events like purchasing a home or having children) to ensure it still reflects your wishes.

Common Mistakes to Avoid

• ❌ Not Having an Agreement: The biggest mistake is failing to create one, leaving everything to chance.
• 📚 "DIY" Agreements: Attempting to draft a Cohabitation Agreement without legal counsel is risky. Generic templates often lack the specific nuances required by South Dakota law and may not be tailored to your unique circumstances, rendering them unenforceable.
• 🤫 Lack of Full Disclosure: Hiding assets or debts can be grounds for invalidating the agreement.
• 🤝 Signing Under Duress: If one party feels pressured or forced to sign, the agreement could be challenged successfully.
• 📜 Including Unenforceable Clauses: Clauses that attempt to dictate child custody or provide for alimony will likely be struck down by a court.

Hypothetical Cases in South Dakota

Case 1: Protecting Inheritances and Pre-Existing Assets

Sarah, a successful small business owner, has two adult children from a previous marriage and significant inherited property. Mark, her partner, has a steady job but fewer assets. They decide to move in together in Sioux Falls. Without a Cohabitation Agreement, if they separate, Mark might claim an equitable interest in Sarah's pre-existing assets or business growth, arguing he contributed indirectly through household support. A Cohabitation Agreement, however, can clearly state that Sarah's business, inherited property, and any growth thereof remain her separate property, ensuring her children's inheritance is protected and avoiding complex litigation over asset commingling.

Case 2: Joint Property and Unequal Contributions

Emily and David decide to purchase a home together in Rapid City. Emily contributes 70% of the down payment, while David contributes 30%. They agree to split the mortgage and household expenses 50/50. If they separate five years later, without an agreement, determining how to divide the equity fairly, accounting for initial contributions and subsequent mortgage payments, could become a contentious legal battle. Their Cohabitation Agreement could specify that upon sale, they first recoup their initial down payment contributions, and then the remaining equity is divided based on their contribution percentages or another agreed-upon formula, avoiding potential losses and disputes.

Case 3: Financial Support During Career Development

Alex, an aspiring artist, moves in with Ben, who has a stable, well-paying job. Alex agrees to manage most household duties, allowing Ben to focus on his career, and Ben agrees to support Alex financially while Alex builds their art career. After several years, they separate. In South Dakota, Alex would have no automatic claim for financial support. However, a Cohabitation Agreement could include a clause specifying a lump-sum payment or a period of limited financial support from Ben to Alex upon separation, acknowledging Alex's non-financial contributions and the initial agreement, making such a provision contractually binding.

A Cohabitation Agreement is not a sign of distrust; it’s a demonstration of responsible planning and mutual respect. It allows couples to define their financial future on their own terms, providing clarity and security in a legal landscape that doesn't automatically extend marital protections to unmarried partners. In South Dakota, where common-law marriage is not recognized, this agreement is truly indispensable for any couple choosing to build a life together without marriage.

Disclaimer: This article provides general information and is not intended as legal advice. Laws are complex and subject to change. For specific advice regarding your situation, you should consult with a qualified family law attorney licensed in South Dakota.