Reasons Not to Marry

Unmarried Advantages

Some say love, not a marriage contract, should keep people together. While there are many advantages to being married, especially stability for the kids, Sheryl Garrett says the advantages of remaining an unmarried couple include liability, credit, inheritance, survivor's benefits and financial aid for education.

Liability

If you get married, you've also married your spouse's debts and liens. Unmarried couples can keep their finances separate, maintain their credit rating and don't risk losing everything if a partner is sued.

Credit

Unmarried partners don't share credit problems. If one partner has a bad credit history, the other can maintain a solid credit rating by paying bills on time.

Inheritance

Unlike a married couple, unmarried partners aren't automatically entitled to receive an inheritance from the other. This is important if you seek to preserve the inheritance for children from a previous marriage.

Social Security

Unmarried partners who are widows or widowers are eligible for Social Security and pension survivor's benefits from a deceased former spouse. 

Financial Aid

A single parent may find it easier than a married couple to secure financial aid for a child's education simply because one income rather than two will be used to determine eligibility.

 Gifts

Unmarried couples can give each other about $11,000 a year without bumping up against potential tax liability. In addition, with proper planning, the partner's aggregate tax liability may be lower than a married couple's.

Tips for mid-age couples

A story published today in Forbes Magazine says that kids change everything.

Adding children to an unmarried domestic relationship makes life richer—and more complex—than your first live-in relationship back in your graduate school days. If children are part of your life, they need to be part of your financial planning, too.

Unlike most graduate students living together, middle-aged couples have assets, including savings, mutual funds and retirement accounts as well as a house and a car. Like their younger counterparts, it's generally wise for middle-aged couples to keep assets separate in an unmarried relationship. But think about life insurance to help your partner, and the kids, if you die prematurely.

"If one partner is not the legal parent, the best thing to do is to draft a co-parenting agreement," says Sheryl Garrett, a certified financial planner and co-author of Money Without Matrimony: The Unmarried Couple's Guide to Financial Security. "Like a domestic living agreement for younger couples, it spells out duties for each partner and how things will be handled if the relationship ends."

Such an agreement can guide the domestic-partnership relationship, but may not stand up in court if the couple splits. In general, the courts determine what's best for the child when ruling on visitation.

Garrett says the level of complexity kids add to an unmarried domestic relationship takes drafting an agreement out of the do-it-yourself realm that can work well for younger couples. She therefore recommends getting legal advice. A good starting place for background information to help define the issues is www.nolo.com or www.lawdepot.com.

In some respects, the parenting agreement is similar to working out the details of joint home ownership. In both cases, the couple must decide who is responsible for what, how much, when and how.

The possibility of a split must be considered in both instances: Who retains the house? If the house is sold, how are the proceeds split? Does one partner have the option to buy out the other's interest and remain in the house? How soon does one partner have to vacate the house? What about relocation expenses? What about child visitation? Medical bills? Or even custody?

Blended families—"yours" and "mine"—are difficult enough to manage, but adding "our" children to an unmarried relationship requires careful planning.

Children of unmarried couples are no longer classified as "illegitimate." But Garrett, who wrote the book with Debra A. Neiman, says a child of an unmarried couple may face difficulties later in life when seeking disability benefits, death benefits or inheritance from an estranged biological parent. The situation becomes more complicated if an estranged father dies without a will and the child has no proof of paternity.

Without such proof, the mother has little leverage if the father decides not to support the child after a split.

Garrett therefore recommends that both parents sign a declaration of paternity and get it notarized to avoid future problems. The statement can simply include the child's full name, date of birth, sex and place of birth. Both parents provide their full names, Social Security number, place of birth and address at the time of the child's birth.

Garrett says listing the father's name on the birth certificate doesn't necessarily obligate him to provide future financial support for the child. But a notarized declaration of paternity signed by both parents will ensure child support if the couple later splits. However, the declaration of paternity doesn't automatically guarantee visitation rights.

Garrett says male partners in unmarried relationships should be cautious before declaring paternity if they're not the biological father. Doing so makes the male partner liable for child support until the child turns 18, even if the relationship dissolves.

It's time to think about insurance when you're young and healthy. This is especially important for unmarried couples because they don't receive many of the legal protections afforded married couples.

Unmarried partners who don't provide for each other in the event of death leave the survivor on his or her own. Remember that, in general, only spouses are eligible to receive Social Security survivor's benefits and pensions.

Garrett says life insurance can be the key to providing for your partner. If you die, it can replace lost income for your partner and family. The survivor's benefit isn't subject to the gift tax. Life insurance can also help offset inheritance and estate taxes.

Domestic benefits are becoming more common, but are far from universal. The U.S. Census Bureau says the number of unmarried couples living together increased 72% between 1990 and 2000. But in 2004, only 34% of employers offered some type of domestic partner benefits to opposite-sex partners.

Unmarried partners generally aren't covered by inheritance tax laws. In most states, when an individual dies and the partner is listed as the estate's primary beneficiary, the assets are hit by an inheritance tax because the partner isn't the legal spouse. The maximum tax, amount subject to the tax and possible exemptions vary by state.

Accurate record keeping is basic to developing a sound financial plan and critical to unmarried couples, especially at tax time. Save all canceled checks and credit-card receipts, and key them to a log listing all payments in chronological order. This will help establish your eligibility for tax deductions.

At some point, it may be simpler to get married—especially if children are involved.

But there's one major benefit to remaining unmarried: You don't have to assume your partner's debt, including credit cards issued by major banks such as JPMorgan Chase (nyse: JPM - news - people ), Wells Fargo (nyse: WFC - news - people ) and Bank of America (nyse: BAC - news - people ), and cards issued by major oil companies such as Exxon Mobil (nyse: XOM - news - people ) or Chevron (nyse: CVX - news - people ). That's not the way it works for married couples—when you tie the knot, you've married the other person's debt.

No matter how devoted you are to your partner, remember this basic point: If you're not careful, risk and liability will overwhelm love.