If you are a couple, married, living together or have some creative arrangement, and if your lives and finances are intertwined, there are money and estate planning matters that should must be dealt . The biggest mistake most couples make is not planning and not discussing their financial lives. In such a case, one or the other member of the couple invariably ends up resentful or feeling like they are being treated unfairly. Best example: one is a saver, the other is a spender.
There are several short term and long term tips for financially melded couples. Perhaps the most important advice is to have a plan. Equally important is to discuss which incomes and assets are to be treated as joint incomes or joint assets and which will remain separate.
Ask these questions: How much money is coming into the household and how do you both want it to be spent? Do you have a joint budget and a plan for keeping it? Are you planning for retirement savings and other savings goals, like a down payment on a house or college expenses? Most of all, are you living below your means? This is especially true if one or both partners have substantial debt. Make it a priority to get that paid off.
Unmarried couples don't have some of the automatic protections married couples have, especially as far as estate planning. Most state laws give a spouse the right to inherit automatically. However, an unmarried partner's rights are many times almost nonexistent. That shows how important it is to set up your finances deliberately if you want to leave money to a partner while you're not married.
Here are two strategies to achieve that goal.
Joint Tenancy. Holding property in joint tenancy accounts with rights of survivorship serves to transfer ownership directly to the surviving partner after death without probate, and without a will or regard to the laws of intestate succession. Beneficiary designations on retirement accounts and life insurance policies can also do the same thing.
Powers of Attorney. Make sure to give each other powers of attorney for both financial decisions and healthcare choices on each other's behalf.
Too many people just make assumptions about what their partner would want—or they ignore tough decisions. Doing this only makes it harder if the worst does come to pass. Without these tough conversations, you might find yourself unsure what to do if your partner is temporarily or permanently incapacitated, or if they pass away.
Talk openly about your wishes, and then make plans to put them in place with the help of a qualified estate planning attorney.
Reference: Motley Fool (October 17, 2015) "Financial Moves Unmarried Couples Should Consider Making"