It’s one of life’s most magical moments. When you and a partner decide to go “all in”. Maybe it’s deciding upon a committed relationship or to get married but you are now going to involve yourselves in one another’s lives. In many cases, this is a smart financial move as well as an emotional one. There are certainly financial economies of scale involved in co-habitation and the IRS offers quite a menu of goodies to married couples that are not available to singles.
Remember, though, you could become “one economic unit” as a couple in the eyes of the tax authorities and that means you could well be taking on both the good and the bad of your partner’s financial situation. Are there ex-spouses financially present in either of your lives? Children from previous relationships? Significant debt or liability? What is your partner’s philosophical approach to money and is it similar to yours?
The number of people involved in non-traditional relationships has been soaring over the last few years. Unmarried couples (of all sexual orientations) increasingly living together, married couples increasingly living apart and the strike-down of the Defense of Marriage Act and its effect on the LGBT community all mean that specialized and customized financial planning is more important than ever.
Unfortunately, of course, not every relationship pans out as we originally hoped. Indeed over 46,000 divorces are filed for each week in the US and while 41% of first marriages end in divorce, a staggering 73% of third marriages crumble. The effects of divorce can often be devastating and while an attorney or mediator can give very general guidance on some of the financial outcomes, it is a financial planner that is best qualified to help prepare one or both parties work with their matrimonial professionals to handle the process from a financial perspective. Often one party will be thrust into a situation of having to be financially astute after years of reliance upon a partner for that side of things. What they need more than anything is financial organization and education. They will need a guide. TA Planners can be that guide.