face special financial situations
Everyone knows the financial perks and pitfalls of
saying "I do." But what awaits you financially if you
say "I don't"?
According to the 2000 U.S. Census, some 11 million
Americans are living together unmarried. The reasons vary widely.
Some want to test drive cohabitation before marching
down the aisle. Others don't like the marriage odds; statistically,
half will end in divorce. Often, it's economic; they don't want
to lose alimony, pension payments or survivors' benefits by remarrying.
And some couples are prohibited by law from marrying.
Married or not, money troubles are the No. 1 cause
of household fireworks. However, without the tie that binds, you
could find yourself burned when the romance cools.
"The problem with unmarried couples is they're
in love," says Steve Rhode, president of Myvesta, a nonprofit
debt-education organization. "Sometimes love and credit do
not operate well together.
"Some people are very manipulative in relationships.
What I see are people who get together and feel it would be very
insulting to talk about money or look at each other's credit report
or not trust the other person."
If marriage isn't for you, here are some ways to protect
Strangers by law
Without a wedding ring, your rights and responsibilities in a relationship
are far different than those of your married coworkers and friends.
In a nutshell, you and your partner are considered
legal strangers with no more rights to or responsibility for each
other's assets and liabilities than two passersby. Financially,
that can be variously a good thing, an inconvenience or grossly
You may pay less federal income tax, a good deal.
But you won't be able to file jointly, kind of a hassle.
You won't be liable for your partner's debts, another
good thing. But if you apply for credit together, you will be penalized
for your partner's poor credit rating, and that's definitely bad.
And if your partner abuses your joint account, your credit rating
will be dragged down, too.
You won't be responsible for your
partner's doctor bills, whew! But neither will you automatically
inherit anything as next of kin or have any legal rights regarding
children in your partner's custody, unless legal provisions have
been made to entrust them to you.
Your finances remain your business alone until you
open a joint bank account, apply for a credit card together (or
add your partner as a co-signer on an existing card) or take out
a home loan together. At that point, you each become legally liable
for the entire amount of the total debt, regardless of who caused
And although things are slowly changing, chances are
you won't be eligible for most spousal benefits. This includes Social
Security survivors' benefits, pensions, gym memberships and second-driver
status when renting a car.
One bright spot is health coverage. Dorian Solot,
an advocate for unmarried couples, says that thanks in part to the
activism of gay and lesbian groups, about one in four Americans
now works for an employer that extends group health insurance to
domestic partners. Inroads also are being made in other areas such
as tenant and car insurance. You can even obtain joint homeowners'
"If you shop around, you can find a company that
will insure you together," she says. "Sometimes the most
helpful insurance agencies are ones that cater to the gay community
because they have a lot of experience working with two partners
that are not married to each other."
Documenting your relationship
But in most instances, there is no official acknowledgment of an
unmarried partner or that person's rights in a relationship.
That's why unmarried couple Dorian Solot and Marshall
Miller, founders of the Alternatives to Marriage Project and co-authors
to Each Other, recommend couples draft four legal documents:
- A will
to ensure your partner inherits what you wish to leave him or
- A cohabitation or domestic-partner agreement to
set out the rules of your relationship.
- Durable power of attorney for financial management
so that you will be able to pay bills, deposit checks and collect
benefits for you if you become incapacitated.
- Health-care proxy that will allow your partner
to make decisions about your health care in case of emergency.