Financial Planning for Unmarried Couples

Financial planning in a relationship is always difficult whether you are married or not. In both situations you need to pay bills and have good financial agreements. When you are married there are two options. You can make a contract, such as a prenuptial agreement, which settles almost everything in case of divorce or if you decide not to stay together. If you decide not to make a contract, the law indicates all assets are common and each partner gets 50% of belongings.

In the case you are not married, but living with a partner and sharing expenses, these agreements do not apply; although some regions do have a common law established if people live together and present themselves as a married couple. In order to protect both partners' interests, it is best to make certain financial agreements on paper and a good idea to sign your paper in front of a notary to formalize the agreement.

It's advisable to keep yours and your partner's assets separate and note any assets you each owned before you moved in together. It is also a good idea for unmarried couples to keep separate bank and credit accounts. At the time you move in together, you probably will feel nothing can ever go wrong, which is great, but this isn't a wise way to approach financial arrangements. Nobody can predict what the future holds and if you keep separate accounts, your assets are protected in the event something goes wrong. This way there are no problems about the money you have in your accounts in the event of a break up. It also ensures you aren't left responsible for a lot of debt your partner may have accumulated in the timeframe you lived together.

There is probably a difference between the salaries of you and your partner, in this way, it's not very different than in the case you were married. Make good agreements to share the daily expenses; probably the one who earned the most will pay the greatest part but that is something you can best arrange jointly. Another good possibility is that you have one shared checking account which you withdraw every month a certain percentage from your personal account and transfer to this one according to the agreement which you made together.

Financial planning is very important in case of large purchases like a car, a house and some other big ticket items. If the item purchased belongs to both of you be sure that both names are mentioned on the invoice and in case of a house make sure that the percentage of both partners is written in the notary act. Also in case of a loan to buy a house, be sure the bank drafts a document where the contributed percentage of both unmarried couples is included.

For the purchase of a house or apartment it is necessary that you choose between "joint ownership with rights of survivorship" or "tenants in common". Joint ownership means that in case one of both persons dies the other one inherits the full house. Tenants in common means that only 50% of the house is for the one who stays alive and the other 50% is for the children or in case you don't have children to the people which you specify in your will. It is a little bit different between the different countries and continents but in general the system is similar.

In the past unmarried couples had more tax benefits because they only paid taxes on their own income and assets and the percentage of their taxes was much lower than in case of marriage. This is changed in almost every country and married couples don't have to pay a higher percentage anymore because every partner pays taxes of the income they earn and common assets are divided according their contract.

Financial planning for unmarried couples also means that you have to save more for your retirement than married couples because they don't have the rights to the Social Security benefits of the one with whom they live with. Your partner has no automatic right to the pension funds or IRA funds like married couples do. In case you were married the surviving spouse has the legal right to these funds but in case you are not married it is necessary that you designate your partner as the beneficiary of your retirement plans otherwise they can't receive the money of these plans. A good tip is also to take a life insurance policy where you can mention your partner as the beneficiary and they can receive a certain amount if one of both will die.

A will is an important document for unmarried couples. Many financial benefits are arranged by law in case you are married and that is why in case you are not married you need to create this important document. This way you can ensure your assets benefit the one with whom you live with; together you can make a testament and give comparable benefits.

Financial planning is a must for everyone, but in case you are not married, you will need to take extra steps and pay more attention to it. Do it carefully, spend enough time on it, and think on all the possible consequences; this is the key for a good financial planning for unmarried couples.