3 financial considerations for unmarried couples
There are many explanations--personal, financial and otherwise--why some couples don't get married. But because unmarried couples lack some of the same legal protections that married couples benefit from, being proactive about clarifying the "fin...
There are many explanations-personal, financial and otherwise-why some couples don't get married.
But because unmarried couples lack some of the same legal protections that married couples benefit from, being proactive about clarifying the "fine print" of legal and financial documents is critical.
All unmarried couples should consider these three tips.
Establish a Power of Attorney
Naming your partner as your power of attorney can allow that person to step in and manage your finances and/or your health care decisions if you're no longer able to do so on your own.
There are generally two types of power of attorney forms. A durable power of attorney goes into effect once it's signed, while a springing power of attorney only goes into effect once certain conditions are met. You should speak with an experienced estate planning attorney to find out which is right for you.
Check Up on Your Beneficiary Designations
It's not uncommon for those in an unmarried relationship to have been previously married or, at the very least, come from a previous long-term relationship. It's good practice for everyone, regardless of your relationship status, to periodically review your beneficiary designations on your life insurance policies and retirement accounts.
There are countless horror stories of people who have forgotten to review their beneficiary designations and, upon their passing, had their benefits go to an ex-spouse rather than their new partner. Review your beneficiary designations on a regular basis to ensure you don't fall into this trap.
Square Away Home Ownership Details
If you're planning on purchasing a home together, make sure you've sorted out all of the necessary details. It's typically advised to have both of your names on the deed, but consider the potential complications if you or your partner has poor credit. It's also wise to discuss how much each person will contribute toward the down payment, mortgage costs and future improvement and repair expenses.
On a related note, if you own your home outright, it's not guaranteed that your homeowner's policy will cover both you and your partner. It's possible that your partner may be legally viewed as a renter, meaning they'll need to purchase rental insurance to protect their property.
Financial planning discussions surrounding couples often look at married couples, but the fact remains that there's a number of key planning considerations unmarried couples should keep in mind. While being domestic partners can produce a number of challenges, proper financial planning can help you prevent these challenges from creating unnecessary havoc.