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" Among a dozen solid reasons not to marry my wife, one stood out as the most persuasive: Her mother is a divorce attorney. Except for homicide detective, forensic medical examiner, and talk-show producer, no other occupation provides a more frightening glimpse into the kind of crap spouses perpetrate on each other. A depressing trip through the transcripts of my mother-in-law&amp;#039;s depositions and trials reveals that most of these shenanigans involve money. But if there&amp;#039;s a situation even more perilous to the finances of a broken relationship, it&amp;#039;s when the partners in that relationship don&amp;#039;t even enjoy the paltry protections offered by the law. A few months ago, a friend asked me a question that I&amp;#039;ve been hearing a lot lately. He&amp;#039;s been living with his girlfriend for years. They have three kids. They want to buy a house. Are there any financial reasons why they should or shouldn&amp;#039;t tie the knot?  I&amp;#039;m not here to tell anyone how to live. And the decision to marry should obviously have a lot more behind it than dollar signs. When it comes to nontraditional relationships, however, the financial, legal, and tax systems just haven&amp;#039;t kept pace with the culture. If you&amp;#039;re in a long-term committed relationship--and this goes for partnerships of all stripes--several areas warrant extra attention.  WRITE IT DOWN  Any joint agreement entered into by both partners in a long-term relationship should have its conditions spelled out in writing. Look, I loathe the overlegalization of America, but a little common sense and some plain-English contracts can actually save people a lot more time in front of a judge than it costs. And don&amp;#039;t use that tired &amp;quot;Contracts will take the romance out of it&amp;quot; line. If you aren&amp;#039;t ready to have a serious conversation about these issues, then you&amp;#039;re not ready to share a life with this person. Period.  Recognition of common-law marriage varies from state to state. But wherever you live, if you&amp;#039;re in a long-term relationship, it&amp;#039;s a good idea to spell out your finances. If you specifically intend not to be seen as common-law spouses, write a document that says so, and be sure you both sign it. If one of you provides more to the household than the other, prepare a &amp;quot;support agreement&amp;quot; that spells out the arrangement and details what each can expect should the relationship end. And if you agree that a certain valuable possession will be enjoyed by both but owned by one, record that thought and sign your names. Not every cereal box has to be initialed, but valuable or sentimental items deserve a clear meeting of the minds. BUYING A HOME  I don&amp;#039;t like the idea of nonmarrieds buying a home together. I&amp;#039;ve seen too many couples of the &amp;quot;We don&amp;#039;t need no piece of paper from the Man, man&amp;quot; ilk buy a dream house only to see the stress of the experience divide them beyond repair. When two people sign a mortgage (or any other form of debt), they are jointly liable for the entire obligation. Should the couple break up, each is responsible for the total mortgage payment, even if the other vanishes or dies. I&amp;#039;m not saying that nonmarried couples stand a much greater chance of breaking up than marrieds. But if they do split, they lack the enforcement and judicial arms of the government, which otherwise make sure legally coupled people fulfill their obligations.  Even if the cohabitants try to work together, they still face paying the whole mortgage plus the housing expenses of the partner no longer living in the home. If the value of the home has dropped in the interim, it&amp;#039;s an absolute crusher, because if the couple is forced to sell at an inopportune time, a negative-equity situation may arise, meaning the balance of the principal is greater than the value of the home.  There are a few things any couple can do to smooth the home-buying process. The first thing to consider when applying for a mortgage is whether each of you could afford the mortgage even with zero contribution from the other. Often, this is not the case, and the lender won&amp;#039;t necessarily expect it to be. But the lender, anticipating a breakup, may have tougher expectations for an unmarried couple. Married couples can usually expect a loan that will carry a monthly payment of up to 28 percent (that includes principal, interest, taxes, and insurance, or PITI for short) of their monthly pretax income. Another benchmark is a monthly payment on a loan that, when combined with all other debt, totals less than 36 percent of the couple&amp;#039;s monthly pretax income. This shouldn&amp;#039;t be a deal killer, but I&amp;#039;ve found that lenders are pretty wise in assessing what people can afford. Remember, the house is 80 or so percent theirs--they make it their business to predict when a borrower&amp;#039;s in over his head. Once you&amp;#039;ve got the mortgage, talk to the attorney representing you in the transaction. According to DeVon Williams Daniels, a Delaware financial planner who advises many clients in nontraditional family situations, the deed should recognize each of you as &amp;quot;tenants in common, with right of survivorship.&amp;quot; This means that each of you has a right to the home (so long as the payments are made, of course) and that if one happens to die, the bank or heirs cannot simply install some tenant in your home. Keep in mind that the language on the deed takes precedence over a will or any other document. If your honey takes off and her name is on the deed, she still has a right to the house; you&amp;#039;ve got to refinance the loan to obtain clear title. After you begin paying the mortgage, you&amp;#039;re eligible for one of the great, perfectly legal tax dodges. Here&amp;#039;s how it works: Because you&amp;#039;re not hampered by the so-called marriage penalty (which overly taxes married couples whose earnings fall within similar tax brackets), you will of course be filing separate tax returns. The one of you in a higher tax bracket must specify that his (or her) entire contribution be applied toward mortgage interest (and other Schedule A deductions). Say your monthly payment is $2,000: about $400 principal, $1,000 mortgage interest, $500 property tax, and $100 insurance. Suppose you&amp;#039;re in the 36 percent bracket and your girlfriend is in the 15 percent bracket. You&amp;#039;ve decided to split the house payments equally (though you pay for everything else, naturally). Rather than sending a check for $2,000 from the joint account, you write one for $1,000 from your own account, speci-fying that it&amp;#039;s to be applied to mortgage interest. Your sweetie&amp;#039;s $1,000 covers the principal, insurance, and property tax. At year&amp;#039;s end, having paid $12,000 in totally deductible interest, you&amp;#039;re looking at a deduction of $4,320--about 50 percent more than what you&amp;#039;d get as a couple if you&amp;#039;d paid from the joint account. And it&amp;#039;s easier at tax time, too. A similar opportunity to save comes in the form of tax-bracket arbitrage. A higher-earning partner can make a gift to a partner in a lower tax bracket, allowing up to $10,000 a year to escape the tax man&amp;#039;s scalpel. Remember, though, a gift is a gift--once it&amp;#039;s made, you no longer control it. PROTECT YOUR KIDS  Nobody runs around saying &amp;quot;bastard&amp;quot; anymore, but unmarried couples expose their offspring to all sorts of risks not shared by state-sanctioned couples. The most pressing issue involves making your wishes for your minor children known should you expire before your time. When the mother of your children is not your legal wife, your death results in a free-for-all that may leave important decisions to people you don&amp;#039;t know or trust. Speaking of trust, the first thing a nonmarried parent should do (after writing a will, which you already did when you got serious with the person who is not your wife) is establish a trust. This isn&amp;#039;t a bad idea for married folks to do, either, since, should you both croak in a car crash, your kids may not have the legal protection they need. Daniels recommends a guardianship trust, which is typically established with your children as the beneficiaries and is unbreakable until the youngest child reaches a specified age (say, twenty-two, to ensure that his education is covered). This prevents your assets from falling into the care of either a former partner you no longer trust or, worse, the creepy boyfriend she left you for. You can appoint anyone you like to manage the trust for your children--their mother, your brother, a bank, whatever. This is easy and relatively cheap--a good lawyer can do it in an hour or two. It can even be done via a testamentary trust, which is created upon your death and funded with the assets from your estate. Set up an additional document that spells out who you&amp;#039;d like to care for your kids. Finally, be sure to establish legal paternity as early as possible--get your name on the birth certificate and also draw up a document that says you give the child your name and accept responsibility. This stuff is particularly critical for same-sex couples with children. The partner without a biological connection is virtually without rights. Should the biological parent die or leave the relationship, the other partner may have little chance of participating in the kid&amp;#039;s life, regardless of the role he&amp;#039;s played up to that point. A contract spelling out the obligations of all the people who play a parental role in the child&amp;#039;s life can alleviate many of these risks.  Another thing to consider is social security. Nonmarrieds cannot collect the SS payouts that a spouse is entitled to. If you die prematurely, your minor children will receive payments, but your sweetheart will not--all the more reason to make sure your will, insurance, and retirement accounts are in order. As with deeds, named beneficiar-ies (say, on life-insurance policies and retirement accounts) take precedence over wishes expressed in a will, so don&amp;#039;t forget to make sure those items reflect your current wishes. People whose life circumstances changed years before they died would roll over in their graves if they knew how frequently policies were paid to ex-lovers they hadn&amp;#039;t intended to enrich. On that score, be sure to check your pension plan&amp;#039;s policy on naming nonspouses as beneficiaries, and name both a primary and a contingent beneficiary on all retirement plans. SEPARATE MONEY EQUALS SEPARATE PEACE Lots of married couples discover that the best way to keep money from creating tension is to maintain sepa-rate checking and savings accounts. This is even more critical for those who don&amp;#039;t enjoy the legal protections of marriage. Consider establishing a hybrid system in which the partners share a joint account, out of which household expenses are paid, but each partner main-tains a private account as well. (This is called &amp;quot;his-hers-ours&amp;quot; banking, but we&amp;#039;ll call it A-B-AB in a PC attempt to degenderize the concept.)  The hybrid offers many of the advantages of each system: the independence and protection of separate accounts and the accounting ease and solidarity of a joint one. The potential drawback is that banks often require minimum balances before free checking and other perks kick in. Obviously, it ties up cash to maintain those minimums in three accounts. But remember, it never hurts to negotiate. Some banks may lower or waive minimums when you keep several accounts there; others may agree to consider the total held in all accounts in satisfying minimums. OTHER TIPS  Never lie about your marital status. Don&amp;#039;t say you&amp;#039;re married if you&amp;#039;re not, since some situations may arise in which a nonspouse can assert spousal obligations on you. Other potential problems: Life insurers may try to shirk your beneficiary if they were led to believe you were married to the person when you were not. Joint credit accounts, as well, often have a box where you can check &amp;quot;spouse.&amp;quot; If you&amp;#039;re planning to own credit cards in common, cross out that box and write in &amp;quot;co-applicant.&amp;quot; Nolo Press has a book that covers many of the situations listed here and more. The Living Together Kit includes Nolo&amp;#039;s trademark dead-on advice as well as sample contracts that can save you some legal fees. "^^<http://www.w3.org/2001/XMLSchema#string>
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