Reasons Not to Marry
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.
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.
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.
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
Unmarried partners who are widows or widowers
are eligible for Social Security and pension survivor's benefits from a
deceased former spouse.
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.
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.
August 3, 2005
for mid-age couples
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."
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.
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.
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.
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?
families—"yours" and "mine"—are difficult enough to manage, but adding
"our" children to an unmarried relationship requires careful planning.
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
proof, the mother has little leverage if the father decides not to
support the child after a split.
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.
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.
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.
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
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.
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.
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.
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.
point, it may be simpler to get married—especially if children are
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:
people ), Wells Fargo (nyse:
people ) and Bank of America (nyse:
people ), and cards issued by major oil companies such as
Exxon Mobil (nyse:
people ) or Chevron (nyse:
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.