Unfinished Business for Unmarried Couples

Please note the publish date of this blog. Financial information, market conditions, and other data mentioned in this post may no longer be accurate or relevant.

We’ve all likely seen headlines that marriage rates are down and those who do marry are doing so later than previous generations. With marriage becoming legal for those in the LGBTQ+ community over the last decade, rates are climbing but are still closer to 10% [1] than the American average of 70% [2]. This means many adults are in a committed relationship but don’t earn some of the automatic benefits included with “tying the knot.”

And yet, what makes sense for one couple may be the reason another goes the opposite direction. Regardless of your views, it’s worth understanding marital trade-offs and the practical ways to ensure your significant other is a significant part of your plan.

Married Wins

In previous blog posts we’ve outlined how Social Security benefits, retirement accounts, and real estate titling can benefit a spouse after marriage. Depending on your plans to buy or sell a home, leave a job currently offering health care, or providing for a loved one when you’re gone, marriage can also lessen the burden of future legal or financial work. But what does it look like if that isn’t the right path for you?

Unmarried Wins

Deciding to stay unmarried can also have benefits, some of which are often overlooked:

1. Potentially Lower Taxes

Income tax brackets differ for single and married taxpayers. In cases where there is a material income difference (and often with no kids), a couple could save by filing two tax returns.

Say a couple earns $300,000 and $50,000 each. The higher earner would pay 35% in the top federal tax bracket while the other would fall to the 22% bracket. As a married couple, that combined income would all land in the higher 32% bracket. Staying unmarried could save upwards of $13,000 a year just with the IRS.

2. Higher Mortgage Deductions

Assuming a couple owns a home together, each taxpayer may be able to claim their own mortgage interest deduction. Current deductions are limited to interest paid on (up to) $750,000 of home debt, but the IRS agreed this is per taxpayer and not per home. Depending on where a couple lives, this could be a big benefit if home costs are high (I’m looking at you, California).

3. Less Legal Work to Untangle Later

This goal more often affects individuals who’ve gone through a past divorce, and can sometimes provide more flexibility when you’d like to leave something to an heir down the road.

4. Higher Level of Privacy

While not as common, there are some couples who prefer discretion when it comes to financial matters — primarily those entering relationships with significant inheritance or family money. Being married affects how that information is shared by default and could pose a challenge if you’d otherwise prefer not to.

Planning Wins

No matter where you end up on your road to happiness (and whatever detours you brave along the way), we want to ensure you have everything to take care of your loved ones and let your loved ones take care of you:

    • Estate Planning – No matter your age, having an Advanced Health Care Directive, a Durable Power of Attorney, and a Will or Trust, are all incredibly important in naming who’s allowed to manage your personal and financial affairs.
    • Account Beneficiaries – Revisiting who you named as heir to your company 401(k) ten years ago, adding someone to your checking or emergency savings account, or possibly adding a beneficiary to a home (27 out of 50 states currently allow it) are all practical ways to make sure things are in order.
    • Insurance – Regardless of marital status, you can add significant others to your auto, renter’s, or umbrella insurance policy (with possible cost savings by combining policies) to make sure all your possessions are covered equally.

Each person or couple’s situation is different and there is much more worth discussing with your advisor, but there are plenty of ways and multiple paths to protecting whomever you choose to love.



[1] Family Equity Counsel “LGBTQ Family Fact Sheet

[2] United States Census Bureau “U.S. Census Bureau Release 2018 Families and Living Arrangements Tables


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