Firemen's Grapevine

Financial Planning for Unmarried Domestic Partners

Courtesy of Jodie Cohen, Financial Advisor, Morgan Stanley Smith Barney

How times have changed. Less than 22% of American households are composed of married couples with dependent children, according to the latest U.S. Census. That number has dropped significantly: In 1970, 40% of households fit in that category.¹ Meanwhile, over the past 40 years, the number of unmarried couple households has tripled to nearly 4% of the population; there are currently about four million such households in the United States.¹

Legal Protections

Unlike married couples, unmarried partners lack many of the legal protections or rights granted to spouses in the event of divorce or death. Although most states will consider a claim by an unmarried partner, there is no specific legal precedent in the absence of a written contract. Therefore, couples may wish to consider creating a domestic partnership agreement. This document can detail the sharing of expenses as well as the ownership and distribution of assets should the relationship end. A domestic partnership agreement is especially important in situations where one partner is the primary breadwinner or owns the majority of assets.

Decision making control is another crucial issue. Unmarried partners should create durable power of attorney and health care proxy documents. Some states also require a living will to address life-support issues. Creating a letter of instruction regarding burial or memorial preferences should also be considered. If such documents do not exist, an unmarried individual may find that his or her partner’s blood relatives will be allowed to make these key decisions if the need arises.

Unmarried couples with children face another concern: legal guardianship. Nearly 40% of unmarried couples have children under the age of 18.¹ Yet legal guardianship of these children may not be as sound as for married couples. Because of this, unmarried couples should consider signing a written agreement acknowledging parental rights and responsibilities and having each partner name the other as primary guardian in wills.
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Source: lafra.org