Life Changes

Facing the financial issues when unmarried couples split

Holly Smith, Special to
Jamie Grill | Blend Images | Getty Images

You put your heart into your live-in relationship, but you didn't put your name on a marriage license. Now, you and your partner have separated. And while you may be glad to see your erstwhile mate leave, you'd like to hold onto your money.

Unfortunately, preserving your finances post-breakup isn't always easy. If you're unmarried and your now-ex is taking advantage of you, you have less recourse than a married person would in a similar situation.

"Married couples have the 'luxury' of divorce court, where the rules are spelled out; unmarried couples don't," said certified financial planner Debra A. Neiman, principal at Neiman & Associates Financial Services and co-author of "Money Without Matrimony: The Unmarried Couple's Guide to Financial Security."

A 2010 Census report put the unmarried-partner population at 7.7 million—a little more than half of them are under age 35—which means a substantial number of people could potentially face a breakup with a live-in partner.

"The best idea is to draft a cohabitation agreement before you move in together," said Stefanie Benson-Hebberd, a family-law attorney in Olathe, Kan. "It's essentially a contract that says, 'This is how we plan to share our assets, debts and any property we have now or may accrue.'"

If you haven't signed such an agreement and your breakup is less than amicable, see what protection, if any, domestic-partnership laws offer. Twenty-eight states and the District of Columbia offer some recognition of domestic partnerships, according to nonprofit advocacy group Unmarried Equality. (Common-law marriage is an even higher legal standard and is recognized far less often.)

Remember, however, that domestic partnerships are defined differently by each state, being formalized unions in some jurisdictions and looser arrangements in others.

(Read more: Dilemmas of gay divorce)

Here are some tricky post-breakup scenarios, and tips from financial experts for navigating them with your wallet—and sanity—intact.

You're left holding the lease: The best plan, of course, is to make sure you can afford to pay the rent (or mortgage, for that matter) on your own. Not everyone is that farsighted prebreakup, however, especially when they're looking at a romantic partner through rose-colored glasses.

Courtney Smith, formerly a marketing manager at a Scottsdale, Ariz., luxury resort, moved to Annapolis, Md., to rent and furnish an apartment in anticipation of her boyfriend's return from studying abroad. The plan, she said, was to begin sharing expenses equally while she launched her now-thriving, one-woman public relations and marketing firm, CS Creative Suite.

When Smith and her partner broke up, the 32-year-old was left holding the lease while just beginning to generate revenue from her business. She took a full-time bartending job to cover the $1,000 monthly rent herself.

Experts suggest that you could find a roommate to share your apartment, even if that means approaching your landlord to move into a somewhat larger space. Finally, don't forget to reassess monthly bills, including high-speed Internet, mobile data plans and other not-quite-necessities.

"Do you really want all those cable channels," asked Neiman, or did your partner?

You've lost your health insurance: Your ex works for one of the more than 9,300 U.S. employers that, according to a count by the Human Rights Campaign Foundation, offer domestic-partner health insurance. But you no longer have a partner, or the insurance coverage.

Many companies require their employees to notify them within 30 days of the dissolution of your relationship, according to the foundation. If your ex has dropped you from the plan, start by calling the benefits department at your own employer to find out if you qualify for insurance there.

(Read more: Better economy, more divorce)

If you can't get coverage through your employer or you are not employed, contact your former partner's company. Some states and/or companies extend COBRA, or similar, coverage to former domestic partners. (COBRA, or the Consolidated Omnibus Budget Reconciliation Act, allows workers to keep their employer-provided health plan for a limited time after leaving employment.)

If neither of those options pan out, you'll find yourself in the individual marketplace. The federal government's new website at is a good place to start, though difficulties remain with the rollout of insurance marketplaces mandated under the Affordable Care Act.

Additionally, Neiman suggests exploring whether professional associations you belong to might offer insurance.

You both want the high-end stuff: No one's battling over the beanbag chair, but who gets custody of the 60-inch flat-screen TV?

Ideally, you and your ex can divide big-ticket household items amicably, based on who bought—or most uses—a particular item. If you can't, and he or she absconds with something valuable, consider legal action. (The threat alone may be enough to put your ex in a more cooperative mood.)

"Depending on its value, there's always the option to take someone to small-claims court or civil court," said Benson-Hebberd. And you don't need a lawyer to do so.

Your chances of winning depend, in part, on the joint-property laws in your jurisdiction and whether they apply to domestic partners. So, if you've saved receipts and credit-card statements verifying you paid for the item—terrific. If you haven't? There's no guarantee you'll prevail.

You need money ASAP to cover living expenses: An unmarried partner is sometimes obligated to pay spousal or child support, but you may have to fight for the money in court. If you need cash in the short term, you can borrow from your 401(k), although borrowing comes at a price.

(Read more: Before marriage, talk money)

Andrea Packe, a 32-year-old saleswoman for a car-auction company, had been the main breadwinner for her family for years. When she left her partner, she needed quick cash to cover expenses.

To finance a move from Seattle to Harpers Ferry, W.Va., to be closer to family with her two small children, Packe took a five-year, $10,000 loan from her 401(k). She's since repaid half the loan, at 5 percent interest. (A flat withdrawal would have incurred a standard 10 percent penalty. Individual companies set the terms of 401(k) loans, operating within IRS guidelines.)

Taking money out of retirement savings, said Neiman, should be the last resort—due to the "huge cost."

(Read more: Don't go it alone with 401(k) plan)

"It's not just the interest rate you pay back, but that you pay it back with after-tax money," she said. "Honestly, people are better off borrowing from family."

Another option is to temporarily decrease your 401(k) contributions to fatten your paycheck. "Think of it as a faucet," Neiman said. "You can turn it down without turning it off."

Translation: Make adjustments to shore up the present, but not at the expense of your future.

—By Holly Smith, Special to