The Why Of Planning
Unmarried couples need to identify and
understand financial issues and responsibilities in their relationship. This
will protect each party in the event of a breakup, disability or premature
Put It In Writing
Draft a domestic-partner agreement detailing
the split of rent, utilities and other routine expenses. The agreement can
be as simple or as detailed as you want it to be and can be updated simply
by tearing up the old deal and writing a new one. Sign and date it. If
you're young and have no children, you can do this yourself and save on
State in the agreement that personal property
each partner brings to the relationship remains that person's property if
there's a split in the future. Do not buy major items like a stereo,
computer or camera jointly. Keep it simple.
Other than a joint checking account for
household expenses, keep all credit, savings, brokerage and retirement
accounts separate. There is simply no need to merge such accounts at this
point in your life and doing so would unnecessarily complicate unwinding the
relationship if you later decide to split.
Having separate health insurance will help keep
matters simple but will be expensive. If one partner works and carries the
other on an employer-provided plan, the non-working partner will be taxed on
100% of the cost of the premium. Do the math: In many cases, this will be
cheaper than buying separate policies.
If you move into a new apartment, both partners
should sign the lease. If you're setting up house in an apartment with an
existing lease, be sure adding your partner won't violate the terms of the
lease. Most landlords, especially those in university towns, will work with
Make sure the personal property of both
partners is covered by renter's insurance. Shop around. Renter's insurance
is cheap and you'll need the coverage because you'll soon have more stuff
than you imagine
August 2, 2005
for young couples
story published today in Forbes Magazine says that
for young adults, living together
involves more than cross-eyed passion and deciding who takes out the
financial considerations, even for a couple kept in cheese and crackers
by graduate fellowships or just beginning a career.
newer couples to draft a domestic-partner agreement that spells things
out," says Sheryl Garrett, a certified financial planner and co-author
of Money Without Matrimony: The
Unmarried Couple's Guide To Financial Security. "Both parties
should keep a copy. If the relationship ends, the agreement can be
enforced by going to small-claims court or a higher court if large
amounts of money are involved."
Census Bureau reports that the number of unmarried couples living
together increased 72% between 1990 and 2000, underscoring the need for
an unknotted pair to get the financial basics right. Unmarried couples
now make up about 5.5 million U.S. households. That's 11 million people
or about 5% of the nation's population.
partner doesn't see the need for financial planning, try this: Estimate
what you spend weekly on groceries, utilities and other household
expenses. Multiply by 52 and toss in the rent. That's real money, even
when divided by two. A little planning now can avoid arguments later.
domestic-partner agreement simple, because too many clauses and
footnotes will kill the spark in the relationship. The pact should state
that personal property brought into the relationship remains that
person's property if the relationship ends.
update or completely rewrite the domestic-partner agreement any time you
see fit. Just tear up the old copy and start fresh. Both your and your
partner should sign and date the new agreement.
partner has begun a career while the other remains in school, it's still
best to split household expenses 50-50. But if that's not possible,
state in the agreement that the person with the job will contribute a
greater amount to rent and household expenses with the expectation of
being reimbursed in the future through catch-up payments or a lump sum
payment. Keep a record of all contributions to the household account and
make sure the other partner agrees.
the worst. While you are committed to each other at an early stage in
your life, things change and you may not be together forever. In the
domestic-partner agreement, state that you will be civil if the
relationship ends and split expenses equitably. You might consider
including a paragraph that states that you'll go to a mediator and split
the cost 50-50 if you can't reach an agreement on your own.
If you live
in a dream apartment, make it clear in the agreement who has the right
of first refusal if the relationship ends. You might consider a
paragraph spelling out how you'll handle relocation for the former
partner who will leave the apartment. It could include first and last
month's rent on a new apartment and a portion of moving expenses. It's
up to you, but put it in writing to avoid the possibility of future
If you have
children together or accumulate significant assets or debts jointly,
it's time to get an attorney involved after you've penciled out what you
want. At this point, the relationship is no longer simple and it's
important for both partners to understand their rights and
responsibilities under the law.
couples choose not to get married for personal, financial or family
reasons, believing it will simplify their lives. But they don't have the
legal protections that cover their married counterparts. Garrett says
there are about 1,140 federal laws that apply to married folks but not
to unmarried couples. Then comes state law establishing community
property and inheritance.
living together is a trial marriage, especially among young couples.
Some researchers say 53% of women's first marriages are preceded by
"Most of us
have been in a committed relationship when we were young, but often it
wasn't with the person we married," Garrett says.
about to embark on your first live-in relationship, keep the finances
simple. In addition to splitting the rent 50-50, each partner should
kick in another $250 or so a month to cover household expenses such as
utilities, groceries as well as basic phone and Internet service. It
might be wise to set up a joint checking account for household expenses.
Establish it as joint tenants in common so if one of you dies, that
person's share goes to family rather than your roommate. If you later
split, divide the money in the joint checking account 50-50 after paying
all final expenses.
But at this
stage in your life, keep all credit, savings, brokerage and retirement
accounts separate. There is simply no need to merge such accounts at
Don't buy a
car together. If one of you gets sued after an accident, both could be
on the hook if the car is jointly owned. Keep auto insurance separate,
too, but check on coverage if you partner occasionally drives your car.
vehicles last longer than relationships," says Garrett, who wrote the
book with Debra A. Neiman.
expenses such as the health club, golf, tennis lessons, cell phone, CDs,
overseas phone calls and, obviously, clothes should be the sole
responsibility of the individual who incurs them. Make that clear in
your agreement. Going out to dinner and a movie is a snap: Take turns
It's OK to
buy small kitchen items and household goods jointly, but larger items,
such as artwork, large-screen TVs or antiques should be clearly marked.
Include a paragraph in the domestic-partner agreement stating who bought
what and who will retain it if the relationship ends.
a relationship is never easy and you don't want to destroy the fond
memories by bickering over money and household goods. A clear, concise
agreement will help avoid arguments if the relationship ends.