So, assuming the cohabitation implies commitment and longevity, couples need make sure you have an estate plan in place to avoid some very unwelcome surprises down the road.
"There are many things in the law that protect married couples," says said Mari Adam, a certified financial planner and founder of Adam Financial Associates. "There is absolutely nothing in our legal system that protects unmarried couples. If you forget that you can create a lot of problems," she says.
Let's start with the home. Whether you are buying a first home together or already own one jointly, it's important to consider how the property is titled. Adam recommends that a couple that co-own a home title it as "Joint Tenants with Rights of Survivorship." This way, if one of the partners dies that allows the house to go to the surviving partner.
Often couples make the mistake of titling their home as "Tenants in Common." In this case when one partner dies, their half of the property goes to their heirs. That means you could end up sharing a home with your partner's children, parents, or friend.
Another common arrangement is for one partner to own the home and the other partner to contribute to the mortgage payments. While this situation may make sense if the partners are on unequal financial footing, it also begs all sorts of questions, such as if one of the partners dies who will own the home and can the remaining partner afford the mortgage payments.
It is also important for unmarried couples to have the necessary estate planning documents in order. Donald Ray Haas, a certified financial planner and president of Haas Financial Services, who happens to have lived with his partner for 30 years before they wed three years ago says, "The typical legal documents are important for everyone but there is more weight for unmarried couples."
These documents include wills and trusts to determine what property will go to your partner because, unlike spouses, they do not have any legal rights to property. According to Daniel B. Moisand, a certified financial planner and principle of Spraker Fitzgerald Tamayo & Moisand, if you don't have anything in place, your estate is subject to the laws of your state and nowhere in there does it consider someone cohabiting with you. "If you have nothing in place your partner is not going to be a beneficiary of your estate."
In addition, financial advisers recommend a durable power of attorney, which determines who will have power over your finances if you should become incapacitated and a medical power of attorney, which determines who can make decisions about your medical care if you are unable to should also be created.