Carrie Schwab Pomerantz

Dear Carrie: Now that we've turned 50, my partner and I are starting to think about protecting each other financially. As an unmarried couple, what do we need to know about retirement and estate planning? --A Reader

Dear Reader:

With close to 8 million unmarried-couple households in the U.S. today, according to the Census Bureau, there are a lot of people with this same concern. Planning for your later years can be a challenge, married or not. But unmarried couples, whether of the same or opposite sex, are faced with some added issues. From asset ownership to estate planning, it would be wise for you and your partner to review your complete financial picture to make sure you have the proper directives and safeguards in place.


Federal benefits and protections available to married couples -- such as spousal Social Security benefits, veterans' benefits, Medicaid and unlimited marital deductions for estate taxes -- aren't available to unmarried couples. Even if same-sex marriage is legal in your state, the federal government doesn't recognize it and won't grant you federal benefits. And while you may have rights to certain benefits in your state, county or city, some of those benefits may be subject to federal income tax.

As you're probably aware, laws regarding same-sex marriage, civil unions and domestic partnerships vary dramatically from state to state. There are also differences in the rights of same-sex and opposite-sex couples. It's best to thoroughly research the current laws in your home area.


When it comes to financial matters, there's nothing like having something in writing. Think of a domestic partnership or cohabitation agreement as the foundation of your financial relationship, sort of like a prenuptial agreement. Use it to define roles and responsibilities, determine shared and separate assets, and specify the distribution of assets should your relationship end. This is especially important in terms of spelling out ownership rights and percentages if you own a home or other significant property. 

Some states will allow you to officially register as domestic partners. But even if your state doesn't, a written agreement will help you and your partner avoid the heartache that can come from financial misunderstanding.


Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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