However before you consume the leap:
1. Record your arrangement on paper. “Don’t go into it without a written cohabitation agreement, same a ‘pre-nup,’ ” says Daniel Timins, a certified financial planner and estate-planning attorney in White Plains, N.Y. This is even more important, according to him, to protect the interests of your children or other kin.
Best drawn up by a lawyer and notarized, the agreement should spell out financial responsibilities — such as who pays what portion of the household expenses, how assets and debts will be divided if you break-up, and who gets the deductions for mortgage interest and property taxes.
2. Update your wills. An unmarried partner would not automatically inherit the other’s estate, so if you wish that to happen, you must modify will accordingly. You are also able to name your partner as the beneficiary of your retirement funds and life insurance policies. Before you decide to do this, however, make very sure that “your relationship has actually been thoroughly tested,” says Timins.
Do the right financial decisions before moving in together.
3. Keep assets separate. At least in the beginning, do this to keep away from disputes later, says Timins. This is a particular concern for older people, who are going to have more assets than younger singles. Stabilize own checking and savings accounts, credit cards, car payments, memberships, etc.
4. Decide who’ll own. In case you purchase a house together, consider what will be the effects if just one or both of you are on the title. If just one is there, that person is the legal owner of the property. The other, who may have contributed half of the mortgage payments, owns nothing and could get just that at the end of a relationship.
If one of you moves into the other’s home, the person on the title owns the property at the end of the relationship, no importance who pays what portion of the bills.
As for a mortgage, if you take one out jointly, you’ll both be responsible for paying it whether you remain to live together or not. If considered one of you stops, the other will be on the hook for the full amount. Because these matters are complicated and vital, always consult an expert before acting.
5. Purchasing your health care papers in order. If you’re older, health care concerns loom larger. You’ll not have the legal right in order to make medical decisions for a partner who becomes incapacitated. You may even be denied visitation rights at the hospital.
In order to avoid this situation, you can each sign a health medical release to allow the other to see medical information. A health-care proxy will permit you to make health care decisions on the other’s behalf.
6. Think power of attorney. If you’re certain you’ll be together till death do you part, you may wish to sign durable power-of-attorney documents conferring rights to make one another’s financial decisions and to get access to bank accounts if necessary.
Remember that you probably should limit some of your partner’s ability to manage your funds, especially regarding the possible transfer of your funds to his or her accounts.
7. Taking action immediately if things go sour. Finally, advises Timins, “If your predictions for the future don’t work out and you do part company, make haste to change all of the above!”
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