Estate planning for unmarried couple

Question:

We don’t own our house as “joint” tenants; we are co-owners and are listed on our loan papers as co-mortgagors. I’ve read that in Oregon persons who are unmarried and take title together are presumed to be tenants in common. Is it then necessary to file for tenancy in common in our county or is it only necessary to provide language in our will and trust “that the surviving partner can stay in the property for the rest of his or her live (or unless they choose to sell the house), with the proceeds then being distributed one half to each of our beneficiaries”?

Response:

I hesitate to give a definitive answer because I haven’t seen the deed nor do I practice in Oregon. But it seems like there’s no need to change the deed.

When each of you dies, your half ownership of the house will pass to your estate. Language in your wills such as you suggest should work to allow the survivor to live in the house, but I prefer to use trusts for what you have in mind rather wills. The problem with such language in a will (at least in Massachusetts) is that it, in effect, creates a trust for the surviving partner, but doesn’t clearly state that, so it’s a little confusing. Trusts in wills are known as “testamentary” trusts and in most states remain subject to the probate court. The benefit of this is that the court can interpret anything that’s not clear in the will, but it adds to the cost and potentially causes delay.

It would be cleaner to create a joint trust for the house that expresses your wishes. It would avoid two probates, one when each of you passes away, and would provide for successor trustees to step in if either or both of you became incapacitated.

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How Can Unmarried Couple Protect Financial Security of Surviving Partner? Do We Need to Change to Tenancy in Common Before Placing House in Trust? How Can Stepdaughter be Reassured in Estate Plan for Blended Family?