Beware! Financial Pitfalls of Living Together

There are many ways to describe an unmarried committed relationship. Some of the ones that I’ve heard over the years are: ‘living in sin’, cohabitating, shacking up, domestic partnership, civil union and living together. In fact the US census bureau has recently come out with new data that shows that the number of couples living together has recently risen by 13% nationwide[1] . Southern states are leading the way with the largest percentage increase in cohabitating couples from 2009-2010.

I don’t know if this change is driven by the current economy, unemployment, baby boomer children who have seen what divorce can do to a family and won’t marry, commitment phobia or just a willingness to report cohabitation when surveyed by a government agency. All moral judgment and any speculation as to the reasons for increased in cohabitation aside, living together presents some really serious financial challenges that many of us in an unmarried union may simply be taking for granted.

If you are living with someone in a committed relationship, did you know that?

  • Social Security provides no spousal benefits to an unmarried partner
  • Health care benefits paid for by an unmarried partner are taxable income to the recipient
  • There is no divorce court for unmarried couples
  • If unmarried, your property does not pass to your partner like it would if you were married
  • There are no uniform legal guidelines for dividing your shared property if your relationship ends

In fact,  whether we are talking about a same-sex couple or an opposite-sex couple in states where cohabitating unions are not recognized or governed by law[2], several aspects of your  financial lives should be carefully considered to avoid common pitfalls. Financial areas that unmarried couples need to pay particular attention to are:

  • Insurance planning
  • Naming beneficiaries including: 401ks, IRAs, SEPs, insurance policies, annuities etc.
  • Titling of financial/bank accounts and property
  • Health Insurance
  • End of life planning with powers of attorney, health care powers of attorney, trusts and insurance

As more adult couples choose to cohabitate, in the absence of the protections given by law to married couples, unmarried couples should  meet with financial and legal professionals who understand how to best provide for unmarried partners financial and legal needs.

 Remember that: privileges given to married couples do not necessarily apply to couples in non-legally recognized relationships.

 [1]Survey data from January 2009 to July 2010 US Census Bureau and ACS (American Community Survey)Working Paper on the Change in Cohabiting Couples from 2009 to 2010.

[2] Currently the states of New York, Vermont, New Hampshire, Connecticut, Massachusetts, Iowa and the District of Colombia allow same-sex marriage. Seven additional states allow for domestic partnerships and civil unions.

About Jane Nowak, CFP® – MoneyGal2020

Jane Nowak, CFP® is a Financial Planner who specializes on AT&T retirement and benefit plans and on Women’s Retirement and Financial Planning for Women. Located in NW Atlanta suburbs Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently had articles published or has been quoted in articles published online at  NASDAQ,, Fox Business News, Smart Money Chicks, and Financial Planning Association websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC


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