To:      Our Clients and Friends

From:     Todd M. Sahner, Esq. Jane L. Brody, Esq.

Date:     February  2003

Re:      “Till Death Do Us Part?” – Not So Fast

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    Do you, or does someone you know, have a “domestic partner,” “roommate,” or a “significant other”? If so, that person may be assuming some financial obligations that they did not expect.  While we all know that “you can’t take it with you,” you may be surprised to learn that in some cases, you can’t even dictate who gets what you leave when you die.  A recent decision by the Supreme Court of New Jersey has made life a little more complicated for adults who live together and are not married.  As you will see from the brief explanation below, the court’s decision has significant implications for planning objectives, both during a person’s life and after death.

    It has been the law in New Jersey for some time that significant financial consequences and obligations arise from a traditional marriage relationship. If a married couple divorces, there are financial consequences including equitable distribution and alimony, as well as  child support if there are minor children.  Absent a premarital agreement,  when a married person dies, the deceased spouse generally cannot disinherit the surviving spouse - the surviving spouse has the right to elect against the Will of the deceased spouse and receive a portion of the deceased spouse’s assets. 

    Prior to 1979, it was “common knowledge” that absent a traditional marital relationship, none of those financial consequences were of any concern in the event a non-marital relationship terminated.  If two adults were simply living together, the end of that relationship whether through death of one party, or separation, even if unilateral, created no financial consequences.  The first significant erosion of that assumption was made by the New Jersey Supreme Court in 1979, when it decided that adult partners not married to each other (even if each one was married to someone else) may cohabit together in a marital-like relationship, and if one of those partners is induced to do so by a promise of support given by the other – even an oral promise of support -- that promise can be enforced. 

    The ruling in that 1979 case has now been expanded in a recent decision by the state Supreme Court involving the estate of Arthur Roccamonte.   After Mr. Roccamonte died, a female cohabitant claimed that, during his lifetime, Mr. Roccamonte promised to take care of her for the rest of her life, in return for her agreeing to live with him, cook for him and otherwise take care of the household.  The alleged promise was oral, and there was nothing whatsoever in writing to support or refute the alleged oral promise.

    In a groundbreaking decision, the New Jersey Supreme Court held that an oral promise of support for life, if proven, is enforceable against the promissor’s estate.  The Court determined that the appropriate remedy was to calculate a lump sum which provided the present-value equivalent of lifetime support to the cohabitant, to be paid from Mr. Roccamonte’s estate. 

    This case has a number of consequences that anyone considering such a relationship should understand and take into account, including the following:

1.      If Mr. Roccamonte were married to his cohabitant, and had gotten divorced, any support obligation would normally have ceased when he died.  Here, the cohabitant actually receives significantly more since the lifetime support obligation was measured by her life, and not his.  This obligation could be substantial if the surviving cohabitant is much younger than the decedent.

2.      By imposing the support obligation against an estate, chances are the only witness who could refute the existence of an oral agreement  is dead, making the case much more difficult for the representative of the estate and the beneficiaries. 

What can be done in order to protect against a result such as the one the New Jersey Supreme Court fashioned in Roccamonte? 

    First, adults entering into a cohabitation arrangement should seriously consider entering into a formal agreement.  To the extent that there is a written agreement, appropriately fashioned with legal counsel, the issue of an extraneous oral agreement can almost certainly be avoided altogether.  In this regard, the agreement would be similar to a premarital agreement.  While premarital agreements were frequently frowned upon in the past, more and more financial advisors now recommend that  adults planning to live together or get married should seriously consider entering into a premarital agreement so that they can create their own set of rules, rather than relying upon the sometimes uncertain and highly subjective rules that the state applies absent an agreement.  For example, in late November, MSN Money posted on its internet site an article by Terry Savage advocating the use of premarital agreements in a wide variety of situations. 

    Second, adults in a cohabitation situation need to carefully consider their Will and estate planning documentation.  Wills can be crafted so as to address cohabiting partners and certainly in conjunction with a cohabitation agreement or written contract, can avoid the unintended consequences that Mr. Roccamonte’s beneficiaries undoubtedly were subjected to upon learning that a cohabitant was entitled to a significant sum of money. 

If you have any further questions about this subject, please feel free to contact us.

Contact: Todd M. Sahner, Esq Jane L. Brody, Esq.