There are many financial benefits that pertain to married and common-law couples. However, before you assume that you and your partner will reap these benefits, you should know what constitutes common-law marriage. Read on to learn what counts and how it can affect your finances. (Learn more about the boons and burdens of marital finances in Happily Married? File Separately!)

What It Means to Be Common-Law
A common-law marriage exists when a state recognizes a couple as legally married even though they never had a civil or religious service and never received a marriage license. Only 10 states and the District of Columbia recognize common law relationships and each of those state have specific requirements that must be met:

  • Alabama – Both man and woman must be of mental soundness to understand and agree to the relationship and consummate it.
  • Colorado – Both man and woman must live together and others must know that the couple considers themselves a married couple.
  • Iowa – Both partners must agree that they are married and publicly declare themselves as married.
  • Kansas – Both man and woman must be mentally capable of making the commitment to marry and must represent themselves as married in the community.
  • Montana – Both man and woman must be mentally capable of agreeing to marriage, they must live together and be known in the community as a married couple.
  • New Hampshire – Common law marriages are recognized only for inheritance purposes i.e. when an estate is being settled after one of the partners dies.
  • Rhode Island – Both man and woman must intend to be married and act as if they are (i.e. live together).
  • South Carolina – The man and woman must simply intend for others to believe they are married.
  • Texas – The couple must both consent to be married, live together and sign official state documents to that effect with their county clerk.
  • Utah – Both partners must be able to agree to the marriage and others must know them as a married couple.

In addition, some states have "grandfathered" common law marriages, meaning that only couples who have met the state requirements for a common law marriage by a specified date will be recognized as such. Those states and dates are:

  • Georgia – January 1, 1997
  • Idaho – January 1, 1996
  • Ohio – October 10, 1991
  • Oklahoma – November 1, 1998
  • Pennsylvania – January 1, 2005 (in addition, partners must exchange vows to be married).

In most states you will need to "hold yourself to be married" which is essentially acting as if you were married. The ways you can go about meeting that requirement varies by state, but in general means that you do things that most legally-married couples do such as refer to each other as husband and wife (i.e. sign documents as Mr. and Mrs.), wear wedding rings, buy a home together and file your income taxes jointly. (Learn more in Marriage, Divorce And The Dotted Line.)

What It Means For Your Finances
While the majority of U.S. states do not recognize common-law marriages, all states will recognize a common-law marriage that a couple legally entered into in another state.

If you are recognized as a married couple by common law in your state you could enjoy many of the same benefits as legally-married couples such as:

  • Becoming eligible to receive Social Security survivors and spousal benefits.
  • Being able to qualify for employer benefits through your spouse (i.e. health insurance).
  • Being exempt from the gift tax.
  • Having unlimited marital exemption for your estate - up to the federal estate tax limit.
  • Being able to both claim deductions for mortgage interest (if you co-own a house) and children (if applicable).

All of those benefits can help you save money. For example, having one shared health plan instead of purchasing two separate plans you could save thousands of dollars per year. Remember, however, that while you get to enjoy the financial and legal benefits of marriage in most cases you may also be left vulnerable to some of the potential downsides. Although there is no "common-law divorce" you will still need to have your relationship legally dissolved if that time comes and you could be liable for providing the same type of support for your ex-spouse as when a legally-married couple divorces. (Is it worth it to file jointly? Find out in Newlywed Tax Returns: Wedding Present Or Party Crasher?)

Conclusion
Don't assume that being in a long-term exclusive, live-in relationship means you have a common law marriage. Check on the laws of your state and learn what benefits you are eligible for. You could be saving yourselves a significant amount of money by taking advantage of those benefits. But be aware of the legal implications of a common law marriage as well so that you can adequately protect yourself if the relationship ends.

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