A growing number of couples are choosing to live together without getting married. It's been estimated that about half of all millennials merge their finances with someone else at some point without being married.
Unmarried Couples Don't Receive Many Benefits Given to Married Couples
While many people feel that cohabitating is preferable to being tied together by a marriage contract, it can leave them financially vulnerable if they break up or if one person passes away. Unmarried partners don't have automatic rights to Social Security, retirement savings and other benefits that spouses do. They don't have many of the protections that a marriage contract provides.
Therefore, it's important to protect yourself if you're going to be living in the same household and sharing expenses and income. Many legal and financial experts recommend drawing up a "no nupt" agreement. It's similar to a prenuptial agreement in that it codifies the "rules of engagement," as one certified financial planner puts it.
Just a like a prenup, a "no nupt" can include whatever a couple chooses. Commonly, it details how mortgage payments or rent are divided, who pays various household expenses, and how property and other assets, as well as debts, will be divided if you go your separate ways.
Other Important Legal Considerations for Unmarried Couples
An estate plan can also help you protect each other if one of you passes away. If you'd like your partner to have particular assets when you die, it's important to codify that in your will. Further, if you want your partner making financial, health care and end-of-life decisions if you're not able to, you can give him or her power(s) of attorney. That can help avoid serious conflicts between your partner and family members.
It may be worthwhile to get some good tax advice if you are planning on giving your partner substantial amounts of money or gifts. Married couples can give each other as much as they want without any tax implications. However, if your partner gives you more than $14,000 worth of money or other gifts per year, there are tax implications for you.
Many people remain together for decades without getting married because they don't want the government or the law involved in their relationships. However, simply having an "understanding" of what will happen if you break up or one of you dies won't protect either of you financially or legally if that happens. An experienced family law attorney can help you draw up an agreement that will help do that.
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