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The Independent Investor: Don't Let Romance Blind You to Finances
By Bill Schmick, iBerkshires Columnist
04:08PM / Thursday, April 06, 2017

Don't let romance blind you to the financial downside of living together. Unmarried couples need as much, if not more, financial and estate planning than those who are married. Without it, one or both partners may lose everything they have committed to the relationship. Here is a primer on what steps you should take.
Over 6.7 million unmarried couples are co-habitating in America at last count. Over 90 percent of them are heterosexual, in case you're wondering. As such, these couples, regardless of sexual orientation or length of the relationship, are considered and classified as unrelated individuals in the eyes of the law.
And the rights of unmarried couples are different depending on your state. Not all states, for example, recognize common-law marriages. As a result, without legal safeguards, the children you are raising, the assets you have mutually accumulated, and the house that you share can easily be taken from the surviving partner. The law will assume that any property and the care of surviving children should pass to your next of kin. Even your stated wishes of what you would want to happen in the event of your death or disability may not be followed.
OK, now that I have your attention, the first rule is to protect your estate. Your estate is everything and anything you own, or have contributed to before your death. Next, there needs to be documents established for situations that may be short of death but that still safeguard your rights. This would include what happens to you and/or your partner in the event of disability or illness, which might require someone else to make medical and financial decisions for you.
Such an agreement is commonly known as a domestic partnership agreement. Think of it as similar to a pre-nuptial agreement.
"Where is the romance in that?" might be your first reaction. "I will sound like a money-grubbing, so-and-so if I broach this with my partner."
Granted, it isn't a discussion normally accompanied by candlelight and soft music, but every relationship needs to be anchored in reality. The facts are that every unmarried couple should, at a minimum, discuss and implement a domestic partnership document as well as develop an understanding on expense sharing and individual insurance for household effects.
Next in line would be homeowner's insurance, unless the unmarried couple jointly own their home. That's because homeowner's insurance doesn't automatically cover both of you. If one person owns the residence, the other should at least purchase rental insurance to protect his or her belongings.
Finally, if both partners believe they are in a long-term, committed relationship, estate planning is a must. A married couple has at least an implied estate plan. The IRS and the courts have already established and safeguarded the rights of a married surviving spouse in the event of death. No such regulations exist for an unmarried couple. As such, everything needs to be documented in legal form.
At a minimum, there are at least 10 documents and/or provisions that an unmarried couple should at least consider: a domestic partnership agreement, a health care proxy, a will and/or living trust, durable power of attorney, beneficiaries (especially designations on retirement accounts), properly titled property, life insurance, funeral wishes, welfare and custody of any children.
All of the above may sound complicated and/or not worth the effort. You would be right, as long as you never break-up with your partner, or if you never die, but if you feel that either one could happen to you sometime in the future then heed my advice.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at
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