Taking your romantic relationship to the next level — sharing a home — is a big deal in so many ways.
If you opt to live together instead of marrying, you may think you’re saving money (e.g., no wedding!) and keeping your financial and legal independence from each other.
In some ways you may be. But there are a lot of financial and legal considerations that you both should hash out before calling the movers.
That is especially the case for couples over 50 — for whom living together may seem the easier option if they have already had long-term marriages. “My research has shown that following a gray divorce, women and men are more likely to form a cohabitation than a remarriage, signaling that cohabitation is gaining ground among older adults these days,” said sociology professor Susan Brown, director of the National Center for Family & Marriage Research at Bowling Green State University.
An analysis of federal data by the Pew Research Center found that in 2016, couples over 50 represented roughly a quarter of adults living together.
Those in this age group — far more than couples in their 20s and 30s — have already lived complex lives, raised families and saved for and envisioned retirement. They also, much to their chagrin, are more likely to develop health problems during their relationships from hereon out.
But while some concerns may be more urgent for older couples, here are some key questions couples of any age should consider when deciding to live together:
Mari Adam, a certified financial planner and founder of the educational consultancy Mari Talks Money, recommends partners know the financial basics about each other.
This includes your income, assets, debts and credit scores. It also includes what kind of health, disability and long-term care insurance you have. And don’t forget to share with your partner whether and how much you owe in alimony and child support. Surprises and secrets are never welcome in this regard.
If you’re the person receiving alimony or child support, figure out the potential consequences of living together on your eligibility for those payments. Every state has its own rulebook. So check in with a divorce attorney.
“There can be all sorts of gotchas,” Adam said.
In terms of Social Security benefits, if you are divorced or widowed, you may be entitled to benefits based on your former spouse’s earnings records. But the rules may change if you remarry, based on your age.
If, however, you are just cohabitating, that isn’t likely to interfere with your getting those benefits if you’re otherwise eligible, said Steven Rubin, a certified elder care attorney at the firm Drazen Rubin Law.
Figuring out how much each of you will pay for joint living expenses is a conversation worth having, if only to ward off potential resentments in the future.
Adam has counseled people to find “fair and equitable” solutions. For some, that may mean splitting expenses 50/50. But for others that may not make sense.
For example, if you make three times as much as your partner, you might decide to pay on a proportional basis, with each contributing the same percentage of your incomes for common expenses. Here’s what that can look like: 10% of a $75,000 income ($7,500) is three times less than 10% of $225,000 ($22,500).
Beyond dollars and cents, you also might consider what each partner brings to the table in terms of living together — whether it’s cooking, cleaning, home repairs or taking charge of your social life as a couple.
“I’ve seen friends and clients where the woman has money and [her male partner] doesn’t. She pays all the house expenses and he is the handyman,” Adam said.
If your partner owns their home and you move in to that house, consider that the financial benefits of anything that improves the home’s value — such as a new roof or a kitchen renovation — will only accrue to your partner, since you are not a co-owner, even though you will both enjoy the day-to-day benefits of living in an improved space.
“You can solve anything. But you have to be willing to talk about it and be fair-minded about it,” Adam said. “There is no one right answer.”
She also recommends a “yours, mine and ours” approach to bank accounts. “It is important to keep money separate — especially when you have kids. But have a joint account that both parties put money into [for joint living, traveling and entertaining expenses].”
No one wants to contemplate this question. (Even writing about it is unpleasant.)
But discussing it ahead of time can lessen some of the stress, should a situation arise when a partner gets sick and requires chronic care or becomes terminally ill, Rubin said.
Discuss whom each of you wants to legally give a durable power of attorney to — that is the person you designate to manage your finances if you become incapacitated.
Also discuss who you want to be your health care proxies. A medical proxy is the person who will make medical care decisions for you if you become unable to do so for yourself.
And make clear how much and what types of medical intervention you want if you become terminally ill — that is something a proxy will be charged with respecting, even if the person’s family is pushing for something different.
All these wishes should be executed through a durable power of attorney form and what is sometimes called an advance health directive or living will.
And if your partner is not your chosen health care proxy, include a medical release form in your health care directive naming them as someone who you, essentially, want by your side during a health crisis.
“[T]hat will allow doctors and hospitals to communicate with your partner, even if the partner is not the decision maker,” Rubin said. “I also list this in the advance directive that they want the person to have full visitation rights and the decision maker has a fiduciary responsibility to ensure your wishes are met.”
While everyone should have a will spelling out how they want their assets to be distributed, it’s especially important for unmarried couples to do so since the law typically confers a lot of automatic benefits to marital spouses and a person’s children than to one’s live-in partner.
If one or both of you have kids, both partners need to be clear about how the children and the surviving partner will (or won’t) be provided for in the estate.
One concern, for example, may be what happens to the home you share when one of you dies? If you own it jointly, who will inherit the deceased partner’s share? If the person who dies is the sole owner, who will inherit the property? If it’s not the live-in partner, then do you want to have a provision where the partner can stay in the home for a given period of time?
All that can be addressed by setting up a trust for the asset, Rubin said.
One area where things can get tricky with the home, Rubin said, is if the person who owns the house needs expensive long-term care and tries to qualify for Medicaid, which requires them to have very few assets. Even if the home is jointly owned with one’s live-in partner, the state may or may not require that the home be sold before the sick partner can qualify and if it’s sold then their significant other has to move out. If you were married, Rubin said, the property would be treated as exempt for benefit purposes.
That’s why he always counsels couples moving in together to contemplate these kinds of scenarios ahead of time.
“The best thing you can do is plan,” Rubin said.
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