Unmarried Couples

Question: Denisa, my boyfriend and I have been in a serious but unmarried relationship, and I am hearing that we have to be aware of specific financial and legal issues that unmarried couples face. I was wondering if in your next broadcast you could speak to this topic and offer some financial planning tips. Thank you. Karen

ANSWER:

According to the U.S. Census Bureau, unmarried opposite-sex couples make up almost 6.4 million U.S. households (about 10% of all opposite-sex couples)

Married couples have approximately 1,140 federal laws that apply to them but not unmarried ones. For example, unmarried couples may experience the following:

* Unlimited marital deduction on property transfer. Unlike married couples who can defer estate taxes until the surviving spouse dies, unmarried partners may be subject to gift tax. * Social Security survivor’s benefits. Survivor benefits will not apply to the unmarried surviving partner.

Financial Tips for Unmarried Partners

* Ownership of Property. Property agreements should spell out rights and obligations. * Insurance. Have adequate amounts of insurance, such as: health, life, disability, auto/property and long term care insurance. * Tax planning. Learn how to minimize tax liability, such as bunching tax deductions by consulting a tax advisor. * Plan your estate. Legal documents such as a will or trust, living wills, financial powers of attorney and more need to be properly written and up to date. Carefully scrutinize beneficiary designations. * Owning a home. In the event of disability, both names need be on the deed and both partners need powers of attorney. If not, the legal authority to manage the property will not be in place. * Plan for retirement. If your employers offer retirement plans with a matching feature, both partners need to maximize contributions.