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Money in relationships

Money may be the last thing on your mind in the exciting early days of a relationship. However, it can make sense to think about practical matters before taking any big steps like moving in together. Married couples have legal rights and protections that couples who live together don’t. If you don’t plan to marry, you may need to take extra steps to establish your rights and protect what you build together.

Discussing income and debt

Talking about how much you earn can be a sensitive topic, and so is debt—such as student loans, credit cards, or car loans. To make decisions together, it’s important to be clear about how much money you have coming in and how much you’re using to pay down debt. Keep in mind that your incomes could potentially include more than base salary. You may want to consider the value of other types of compensation, for instance bonuses, commissions, employee stock purchase plans, and others. Evaluating your financial pictures holistically can help you decide how to split shared expenses and save for the future. 

Splitting expenses

Deciding how to run the finances in your household early can help keep your monthly budgeting smooth, make paying bills simpler, and provide consistency as you plan for the future. Consider talking in detail about financial responsibilities and bill payments to come up with a strategy that works for everyone.

Saving for the future

When married couples divorce, part of the divorce settlement often involves splitting retirement accounts. Unmarried couples, on the other hand, have no legal method to help ensure an equitable split. 
Each person in the relationship should consider saving for retirement on their own. It’s also important to talk about saving and investing. Consider discussing how much of your income you’re saving for retirement and how much you’re able to save for future goals like vacations, buying a house, a wedding, or having children. 

Ownership of assets

Consider the assets each of you bring into the relationship, and talk about what would happen to joint purchases in the event of a breakup, such as your couch or TV. Consider discussing gifts or inheritances one partner receives and bonuses or equity compensation too. 
Some states recognize common-law marriages and may also have a community property law. This means that even if a couple doesn’t get married legally, after living together for a certain period of time, the state law may declare them married by common law. If things don’t work out, assets acquired during the common-law marriage would split jointly at the time of separation, regardless of the legal ownership. An attorney can best explain these considerations, if state laws apply. 

“What if…” scenarios

Marriage grants certain rights if one partner gets sick or dies, but living together doesn’t. Legal documents help protect each other in a worst-case scenario. For example, owning property and accounts together can help ensure that you don’t lose access if your partner dies. Jointly titled property, bank accounts, and investment accounts titled as “joint tenants with rights of survivorship” will generally pass to the surviving owner.

Consider a written agreement

A written agreement, similar to a prenuptial agreement, could include anything from bill payments to the division of property, in case there is a breakup. Checking with an attorney helps to ensure both parties are protected and that tax implications have been considered.

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This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.