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Next, consider what will happen if your relationship ends. When a marriage breaks up, divorce laws can help determine tough issues such as how the marital property will be divided, who will continue living in your home, who’s responsible for outstanding debt and how custody of any children will be handled.
Depending on your state’s laws and the form of your relationship, there will likely be no similar rules for an unmarried couple. That’s why you may want to consider creating a cohabitation agreement, much like a prenuptial agreement before marriage, to lay some ground rules that may come in handy later.
A cohabitation agreement can identify issues such as who gets the house. There are also other options for unmarried couples, such as a joint tenancy with a right of survivorship, in which you both own the home and the property passes to the surviving partner if one of you dies.
The downside is that under this arrangement you also take responsibility for any debts associated with the home. That means that if one partner stops making mortgage payments, the other will be stuck with the entire bill. You will also need your partner’s agreement to sell the house, since you don’t own the property outright.
Your local CPA can provide advice to help you address the complicated concerns for unmarried couples and keep your relationship on the right financial footing. Turn to him or her with all your financial questions.
Copyright 2011 American Institute of Certified Public Accountants.