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You and Your Money: Singles and unmarried couples need their own
financial plans |
National
statistics show that single people are starting to wield increasing
economic power in the United States, either living alone or with
other singles. For instance, the National Association of Realtors
recently reported that single women are the fastest-growing group in
home buying, while the overall number of married homeowners has
dropped a full 10 percentage points from a decade ago.
Divorced men and women, never-married men and women, same-sex
couples or singles choosing communal living situations with other
friends or family members have their own financial challenges. Yet,
with all the statistical attention on their rising numbers and
spending power, there’s relatively little discussion about their
urgent need to develop financial plans that safeguard their
lifestyles with the same attention that married couples and their
families receive.
It’s time to change that. Because unmarried individuals face
particular obstacles in merging assets with partners or securing the
same child custody rights awarded to married couples, financial
planning is crucial. All unmarried couples should seek the advice of
a financial planner and a qualified estate attorney to achieve their
financial goals.
In the meantime, here’s a checklist of important issues all singles
and unmarried couples should consider alone and with the help of a
financial adviser:
Discuss how household expenses will be split. Without a legal
agreement, the first logical step in the money discussion is how
you’ll handle household expenses in light of your respective
incomes. If you’re setting a lifetime plan, it’s definitely
appropriate to discuss your respective salaries and how to budget
those household expenses so you’ll have savings to play with.
Talk about debt. The best gift two people can present to each other
before they move in together is full disclosure on their respective
finances. If one or both partners has significant student, credit,
business, mortgage or other debt, those amounts need to be brought
into the open and an agreement made on a repayment plan. Start by
pulling your latest credit reports — for your free annual series of
reports, go to
www.annualcreditreport.com.
Take special care when buying property. If you buy a home together,
get some advice on how each of you will protect your right of
ownership. See if it makes sense to own the property as joint
tenants with right of survivorship, or tenants in common. A real
estate or estate planning attorney is worth the money here.
Talk about the kids. If one or the both of you are bringing
children into the relationship, or if you plan to adopt, you’ll need
to cover all the emotional, logistical, legal and money issues
associated with new or blended families. You need to know how your
partner’s childcare obligations will affect your joint finances and
estate plans. Unmarried and same-sex couples need to be particularly
circumspect about estate and child custody issues if one partner
dies. Depending on state law, the custody of the children may be
contested by parents or other close relatives if the correct legal
provisions are not in order.
What about retirement? At whatever point in life you’re entering a
relationship, you need to discuss what you hope your retirement will
be. Talk about assets in your 401(k), IRA and other investment
accounts. If one or the both of you haven’t taken any steps to plan
for retirement, you’re going to need to change that. Also, if you
vary widely in age, it’s particularly wise to ask for advice since
one spouse will be retired long before the other.
What is your estate plan? It’s never too early to think about the
possibility that one of you might die suddenly or be incapacitated.
Many people wait until they’re married to get wills, durable powers
of attorney, health care directives and life insurance or retirement
plan beneficiaries in order, but if you have a specific desire for a
nonlegal partner to gain custody of your children, your assets or
the direction of your business, make time now to talk to an
experienced tax professional, estate attorney and most important, an
experienced family rights attorney.
This column is produced by the Financial Planning Association.
This column is produced by the Financial
Planning Association. |
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From
May 23, 2007,
Newberg Graphic
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