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Money Matters for the Unmarried

Be sure you make the right legal, financial decisions to protect your assets

Avoid buying an overly expensive property that requires two incomes or pensions to pay the mortgage. If one of you moves out, the party remaining in the house may not be able to pay a hefty house payment. Additionally, should the relationship fizzle, you don't want to have to sell at a loss if you're forced to unload your home in a down real estate market.

Creating a written property agreement is prudent for unmarried people buying a house together. That agreement should clearly indicate what percentage of the house each of you owns, what happens to the house if you break up and how the title of the house should be listed on your deed. Ideally, your property agreement will also include a buyout clause, which specifies how the home will be appraised and how long one party has to come up with the money to buy the other person out, should you separate.

Be Sure to Title Assets Properly for Joint Accounts

For major purchases, such as a house, if you both are responsible for paying the mortgage, then both or your names need to be on the deed/trust.

Experts also suggest using a living trust to make sure that, if one of you passes away, the other gets the home. "Your partner could have the house held in a living trust that would provide for your rights if he/she is disabled or dies before you," Morrison says.

For assets that you both want split evenly — from bank and investment accounts to real estate — it's best to title those assets as joint tenants with rights of survivorship (JTWROS). This ensures that if one of you dies, the entire asset passes to the other joint owner.

By contrast, one of the quickest ways to start a potential family feud is for unmarried people to hold assets as tenants in common.

This is where a portion of an asset (generally 50 percent, unless there's documentation to illustrate a different ownership percentage) passes to the deceased person's stated heirs or beneficiaries. This means that if you're the original joint owner, you now share 50-50 ownership of that asset with the decedent's family members or other heirs.

With such important issues hanging in the balance, it's worth it to hire competent estate planners and other professional advisers to make sure your wishes are carried out.

Lynnette Khalfani-Cox is the author of Perfect Credit: 7 Steps to a Great Credit Rating. You can friend her on Facebook or follow her on Twitter @TheMoneyCoach.

You may also like: Is my family responsible for my debt? >>


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