The percentage of married couples in the US has declined from around 60% in the nineties to about half of that presently. Adults, unmarried and cohabitating as partners have increased to 59%.
There has been a significant shift in the marriage paradigm as many couples forego the union of marriage and remain unmarried life partners instead.
Whilst financially, cohabitation does have its benefits as costs are shared, there are certain financial perks that only legal marriages enjoy.
Benefits of Married Couples
This could be tax and pension or even inheritance benefits.
Joint accounts – Couples could benefit from a joint account where only one fee is charged instead of two separate accounts.
Tax – A couple may benefit from joint tax benefits. A couple may pay less tax combined than two singles would and could pay less tax on their combined assets.
Pensions – Spouses usually receive pension or survivor benefits once the primary pensioner dies.
Things to Consider for a Cohabiting Relationship
Unfortunately, society has not kept up with modern living, and many unmarried partners in a relationship could be disadvantaged financially. Current law could leave them with nothing when their partner passes on. Also, they not be privy to unique spousal benefits given by the state and companies. Benefits such as state pension for the remaining spouse. Or even life insurance cover provided by companies that include spouses and children, for example.
Partners of different citizenship might not be eligible for residency or citizenship if no legal marriage exists.
Consider separate private cover for unmarried cohabiting partners. This could be in life cover or retirement planning with them as specific beneficiaries. Especially if work benefits do not cover them.
Consider these financial challenges.
- Pension benefits – Some pension funds only allow for a married spouse. Not any beneficiary to receive benefits after the death of the primary benefactor, leaving a life partner without a means of support.
- Property – Property might be left to children or family if no will is in place naming a beneficiary. Some countries will follow their beneficiary laws if no will is in place. Such as family inherits first, and there are no inheritance laws for life partners yet. This might leave an unmarried partner homeless.
- Tax benefits – ‘Married-according-to-the-law-couples’ receive certain combined income tax benefits that cohabiting couples would not receive.
Importance of a Legal Will and Naming Beneficiaries
Most non-married partners are not likely to be each other’s default beneficiary. Estate planning is probably one of the most important aspects of a non-married relationship.
- Ensure there is a legal will naming the partner as the life partner and beneficiary of any policies or inheritance of the estate. Apart from a will, many personal life insurance policies and personal pensions or retirement annuities have stipulated beneficiary sections written into the policy.
- Have legal powers of attorney or health care directives drawn up, as most hospitals will only allow direct family special visitation rights or to make decisions on healthcare.
- Without a will, the remaining partner might not inherit any assets and be left without financial security.
Unmarried couples should consult with a financial advisor to ensure their partners are included in beneficiary information and that assets are distributed according to their wishes, including private pensions and property, so they are financially taken care of.
Please note, the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.