Financial Tips for Never-Married Couples

The number of men and women aged between 65 and 74 who have chosen to live together without tying the knot has more than doubled in the last decade, Census data show.

Couples who choose cohabiting over marriage benefit in several ways, the psychologist and author Diana Kirschner, a psychologist and author wrote in Psychology Today.

Older cohabitors form happier, more stable relationships than young couples, she wrote, with fewer arguments and more quality time together. They also stay together longer, on average — five years compared with less than two years for younger cohabiting couples.

Of course, older couples who decide to share a home must face problems that young people do not, such as merging established families, navigating myths about stepparents and building solid relationships with a partner's adult offspring.

Then there are the really challenging tasks of deciding what to do about long-term care, preparing to deal with the chronic or debilitating health problems that tend to arrive later in life.

Finally, there is the matter of money. Research conducted at the University of Denver found that financial problems were the fifth most-often cited reason for divorce — named more often than substance abuse or domestic violence.

As unromantic as it may sound, a calm and candid dialogue now about earning, saving, investing and spending may help you and your partner avoid a stormy and fruitless battle down the road. As you plan your financial lives together, consider these money tips from professional financial advisers.

Plan Household Finances. Talk over who will pay for what in your merged household. Cover every financial aspect of your home, from public utilities and streaming services to plumbers' bills and property taxes.

"This is true for any couple, but especially important when you aren't married," says Ryan Johnson, founder and financial planner at Hundred Financial Planning in Grand Rapids, Michigan. "You should write out who pays for what, and who owns what."

Unclear expectations are a great way to invite resentment into a relationship, especially when it comes to money, he continues.

"Things like homes, vehicles, rent or mortgage payments, utilities and the like can all have legal and tax consequences when it comes to who owns them and who is paying for them, especially when filing as a single taxpayer," Johnson explains.

"Make sure you both feel good about it," he adds. "An easy solution is to keep personal things in your own name and then have an even split on things like homes and mortgage payments."

Be honest and open with your partner about how you choose to pay your expenses. "Often, in such cases, the partners have kept bank accounts separate," says Ryan Derousseau, a Certified Financial Planner at United Financial Planning Group in New York City.

Knowing what your partner will — and won't — pay for will reduce stress in the relationship as well as uncertainty. Having regular conversations about how money is spent and with what partner's account will be important.

Establish an Estate Plan. You should give serious thought to having your partner listed on your medical and financial documents.

"If you are never going to marry, you need to get your estate plan and documents in place," says Jay Zigmont, a Certified Financial Planner and founder of Childfree Wealth in Mount Juliet, Tennessee. "If you want your spouse to be involved in your decision making, you will need to list them as your medical power of attorney, financial power of attorney and executor.

"If you don't have a piece of paper stating your wishes, government and health care organizations may look to your next of kin instead of your partner," Zigmont cautions. "Make sure your partner is listed as your beneficiary in your accounts and wills, otherwise they may get nothing."

Once you have all of your papers in order, review them every three to five years. "Make sure your beneficiary options are set the way you want, and review your estate plan with an attorney," says Justin Pritchard, a certified financial planner at Approach Financial in Montrose, Colorado.

"If you will get a pension, you might be able to name a non-spouse to get a survivor benefit, so ask your benefits administrator," Pritchard adds. "That way, a partner might continue to get income after the other person dies."

Don't wait to establish an estate plan.

"Make a plan for what happens if one of you dies early," Pritchard advises. "Couples often plan as if they will both live into their 80s or 90s. That means two incomes from work, and two Social Security payments in retirement. But if one of you dies early? The other might be left in a lurch."

And don't forget to get proper titling on your home.

"Ensure that titling on houses and other assets are in place," Derousseau says. "Without proper titling, when one person passes away, the surviving partner will have no rights to assets that the person might have wanted to give to their partner — or it could trigger taxes.

"For instance," he continues, "if there's a home that one (partner) owns but they both live in, then without proper titling or a will, the house would likely go to a family member instead of the partner. This could leave the surviving partner without a home while they grieve."

Be Savvy About Your Taxes. You'll have separate tax returns but there are ways to save.

"Tax planning can also be interesting since you have two individual returns," Pritchard says. "It's harder in some ways, but there might be opportunities. For example, if one person has a low income but significant pre-tax assets, it could make sense to use those pre-tax assets in low tax brackets. That might include simply withdrawing and spending the money (assuming no penalty due to age 59½ or the "Rule of 55," for example) or Roth conversions."

Unlike married couples, unmarried couple have limits on how much money they may gift to each other. "Married couples have an unlimited amount they can gift to each other," Zigmont says.

Unmarried couples must limit gifts to each other (or anyone else) to $18,000 a year in 2024 or account for gifts in their estate-tax exemption which Congress set at $13.61 million this year.

"While both of these limits are generous, it's an issue of documentation," says Zigmont. "If you use your estate-tax exemption, you need to include it in your annual taxes."