|If you are living with someone as an unmarried couple, you're part of a growing segment of the population. You face some unique financial risks and financial planning considerations that married couples do not. For example, unmarried partners do not automatically inherit each other's assets, as married couples do, nor can they rely on the divorce process to determine a fair division of assets if they break up.
So, while the relationship with your partner may provide all the social and emotional benefits of matrimony, the lack of a marriage license can bar cohabitating partners from many of the automatic legal and financial protections married couples enjoy. Couples willing to do some planning and paperwork, however, actually can overcome many of the financial risks of cohabitation.
One of the simplest, but most effective, things you can do to protect yourself is to spell out your financial responsibilities in the form of a "living together agreement." This contract also should cover what would happen if you break up. Couples that wish to put such an agreement in place should consult an attorney as the requirements and enforceability varies from state to state.
Be aware that getting and using credit as an unmarried couple can be risky. A break-up could leave one partner making the payments on a joint debt. Experts recommend getting to know something about your partner's credit history and habits before taking on financial liabilities together.
If you buy a house together, be careful in choosing how to hold title to the property. One way, a surviving partner inherits his or her partner's share of the property; another way, the deceased partner's next of kin inherits it. Many real estate-related issues, besides inheritance, can come up during a relationship or when it is ending. Draw up a co-ownership agreement that answers key questions and can protect both partners.
All couples who plan to be together for the long haul need to develop retirement and estate plans. But for unmarried couples, which have no legal claims on or rights to each other's property, planning is crucial.
There are many books, Web sites, and other resources that can help unmarried partners educate themselves about the financial issues of cohabitation. Couples should consider consulting a tax adviser, attorney, or estate planner before making any decision that could have major legal or tax implications.