Are you one of the increasing numbers of American singles who cohabitate? Financially speaking, you get to enjoy many of the savings that a married couple would ordinarily experience by not having to maintain two separate residences, pay two sets of unnecessary bills (such two sets of cable and Internet services), and make two sets of unnecessary purchases (furniture and other household items). However, being without some of the financial advantages of marriage might create some serious difficulties. Here are a few things to think about:
Fiscal Management
Joint bank and credit card accounts are still an option, which can make managing family expenses easier and help you feel closer to each other. Being added to the other person’s credit cards can assist the individual with bad credit get a better score. The money in the bank accounts would still be immediately accessible to you both if something occurred to you or your partner.(Of course, if you decide to break up, having joint accounts can complicate matters since you’ll need to set up your own “divorce” procedure.)
However, keep in mind that depositing an excessive amount of funds into a joint account may necessitate filing a gift tax return. This is due to the fact that 50% of all deposits are gift to other person. If you provide more than $17,000 in donations this year, the recipient’s lifetime gift and estate tax exemptions are reduced by that amount, and you are required to let the IRS know.
Estate Preparation
This is one of the most important areas for non-married couples because it is likely that you won’t be each other’s primary beneficiary and that you won’t be considered as family for medical purposes. For this reason, you should obtain current wills, permanent powers of attorney, health care instructions, and beneficiary designations on any trusts, life insurance policies, health savings accounts, and retirement accounts you may own. Free Will, DoYourOwnWill.com, and MyDirectives (which only lets you construct advance health care directives but also offers free online storage) are websites where you can receive the fundamental legal documents for nothing. Check to see whether your employer has prepaid legal plans you can enroll in during open enrollment or discounted legal assistance if you’re thinking about hiring an estate planning lawyer.
You will be unable to roll each other’s inherited retirement accounts into your own retirement account in order to postpone taxes, regrettably. You might not be able to transfer your remaining estate tax exemption to each other or get the unlimited estate tax exemptions that married U.S. citizens are entitled to. Fortunately, the present federal estate tax exemption of $12.92 million makes it unlikely that this will have an impact on most people. Contact with an estate planning attorney if you’re concerned about estate taxes.
Employee advantages
You and your partner are probably not eligible for job privileges like being covered by your respective employer-provided health insurance unless you are domestic partners. Even then, the federal government has the right to tax the value of the benefits to the spouse. Certain employers will cover those costs. If yours doesn’t, you may need to decide whether paying the tax is preferable to looking for insurance elsewhere.
Government Assistance
You will not be able to file taxes together, which is a choice most married couples utilize to cut costs, especially if one spouse earns much more than the other or if they have kids. In relation to adoption, it is not possible to adopt a kid jointly unless you are domestic partners in several states. You cannot petition to keep a non-citizen spouse in the country or claim spousal or survivor Social Security benefits even if you are domestic partners since the federal government does not recognize such relationships. If you are ineligible for survivor Social Security payments, you might require more life insurance even after retirement.
Do You Want to Marry?
As you can see, there are many financial benefits to not getting married, so bear this in mind as you decide whether or not to exchange vows.” Of course, being married has its financial costs, particularly if you end up divorcing. That is one of the reasons getting married shouldn’t solely be a financial decision.