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Moving in together

A commitment to joint financial health

These days, many couples live together with no plans to marry. And while domestic partners don’t have as many legal benefits as married couples, there are ways to protect both partners’ interests. 

Take the quiz

Approximately how many unmarried couples live together in the United States?

Correct! It’s 7.5 Million

That number has grown by more than 1,500% in the last half century. Cohabitation is the new norm.

Not quite! It’s 7.5 Million

That number has grown by more than 1,500% in the last half century. Cohabitation is the new norm.

Source: "Number of U.S. adults cohabiting with a partner continues to rise especially among those 50 and older," Renee Stepler, April 6, 2017, Pew Research Center

Combining your finances

Start with a candid discussion about how you feel about money, the lifestyle you want and what you want for each other. This will help you decide if you should combine your finances or manage them separately.

 

What are you worth?

Knowing your net worth will help you decide if you need a domestic partner agreement, if assets should be in individual or joint names, and if one persons’s debts puts the other’s assets at risk.

 

The importance of planning ahead

As part of an unmarried couple, you have less legal protection than a married couple in the event of incapacity, death or splitting up. If you combine your finances and your relationship ends, the process you'd follow to unravel commingled assets is not as well-defined and can be quite complex. For this reason, it's important to plan ahead.

Managing the day-to-day

Cash management

Many couples, married or not, continue to keep separate checking accounts and add a new joint account for shared expenses. Keep in mind that you are both liable for any overdrafts on a joint account.

 

Two ways to contribute

Establish a budget for shared expenses and each of you can contribute a set monthly amount to the joint account.

  1. Equal amounts
    If your salaries are about equal, it makes sense to contribute the same amount.
  2. By percentage
    If one of you earns more, a percentage basis may make more sense. For example, if you make $40,000 and your partner earns $60,000, you could contribute 40% and your partner 60%.

 

Insurance

Should your health insurance change to that of your partner? Many companies offer the same benefits to domestic partners as they do to married couples, but there can be income tax implications.

Is your life insurance up-to-date? Ask yourself these questions:

  • Who relies on me and my income?
  • What would happen to my loved ones if I can no longer earn an income? How long could they maintain their current lifestyle with only our accumulated assets?
  • If I lose my job, will I lose my insurance? Can I afford to replace it? Can I even qualify for new insurance?

 

Credit cards

It may seem easier to combine credit cards. But with shared credit comes shared liability. Depending on your respective credit histories, it might be best to keep your own credit cards.

Paying the price for picking up the tab

While married couples may transfer unlimited funds and assets without any gift tax consequences, unmarried couples can’t.

When one domestic partner pays all of the expenses for the other, it can be considered a gift. You can give up to $15,000 per year as a gift to your partner without gift tax concerns, but giving more may require you to file a gift tax return and eventually pay gift taxes.

Did you know?

One way you can exceed the annual limit of $15,000 is to pay your partner's tuition and medical expenses (including health insurance) directly to the providers without having to count those payments as gifts.

 

 

Property title matters

There are income, gift and estate tax issues related to titling property. (Property isn’t just real estate but also bank accounts, investments and personal property.) Before placing any property in joint ownership, consult your legal and tax advisors to understand how titling issues apply to you.

  • Separate Property
    • Titled in your own name
    • You control how property is eventually transferred
  • Joint tenants with rights of survivorship (JTWROS)
    • Listed in both of your names
    • When one of you dies, the property passes automatically to survivor
    • It won’t pass under your will or other estate planning documents
  • Tenants in common
    • Each partner has undivided ownership in the property, based on his or her contribution
    • Each has control over the disposition of his or her respective interest
    • If only one partner contributes, the other partner received his or her interest through a gift

Planning ahead

It can be tough to think about potential problems in a relationship. For married couples, laws automatically benefit the spouse. This isn't the case with unmarried couples so it's critical that you establish and maintain documents that reflect your wishes for each other.

It’s a good idea to consult your personal legal advisor before making any planning decisions.

 

Plan and prepare

 

Domestic Partner Agreements

Similar to prenuptial agreements, these legal documents outline the sharing of income, expenses and property, as well as intentions for asset division.

Disability Planning

Creates durable powers of attorney, health care powers of attorney and guardian documents for yourself or minor children in the event that you can't manage these matters.

Your Estate Plan

Consider what you would like to happen to your assets in the event of your death and take the needed actions to implement your intentions, e.g., update beneficiary designations and work with your attorney to create documents that might be needed, such as a will or trust.

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