Financial Pros and Cons of Marriage

Whenever I meet with clients or chat with a new acquaintance, at some point their eyes invariably drift to my left ring finger. In fact, I believe that the left ring finger is the new breasts — hello, my eyes are up here!

I think this digit gets so much attention because I’m not married and I don’t have any plans for betrothal. I have a loving partner, we have a beautiful daughter and we have owned a home together for a few years now. We are fully committed in every way — except we don’t have a marriage license. Yes, I’ve heard it all, from, “How Kourtney Kardashian of you!” to a horrified, “Whatever will you tell your daughter?”

If, like me, you have a boyfriend instead of a husband, or a partner instead of a spouse, read on for the benefits (and drawbacks) of not tying the knot.

You Might Pay Less in Taxes

Couples who are high income earners, or close in income range, might find themselves in a higher tax bracket if they get married. Even if you’re filing separately, the threshold for the tax brackets on couples is lower than twice the amount of a single earner. For example, a woman earning $160,000 a year is in the 28 percent tax bracket. So is her boyfriend who earns $150,000 a year. If they get married, their joint income of $310,000 vaults them into the 33 percent tax bracket. Married couples also lose subsidies and can get into the alternative minimum tax space faster than singletons, too.

That said, if you and your partner have disparate incomes, there may be a marriage bonus for you. Additionally, staying “single” means you lose the ability to transfer gifts to your spouse during your lifetime using the marital deduction. If you have a large enough estate to be concerned with properly utilizing your lifetime exemption amount, then marriage might be a benefit. And if you’re thinking about retirement, you should consider the importance of being able to use a spousal rollover IRA and getting Social Security benefits based on your spouse’s record. Since each couple is different, talk with your CPA about what advantages or disadvantages marriage can have for you.

You’ll Have to Plan More Deliberately

Would you like your apartment to go to your partner upon your death? Unless you have your plans solidly laid out in an estate plan, your partner may have no right to your apartment — or anything else you wanted to leave to him or her. He may also be ushered out of a hospital room or prevented from having a say in your medical care if you don’t specifically name him as a health care agent.

Here is a place where the saying, “The road to hell is paved with good intentions” rings true: Don’t intend, plan. It is essential that unmarried couples put their wishes in writing.

Your Assets Stay Separate Unless You Actively Commingle Them

Want to avoid that awkward premarital agreement discussion? That’s easy: Don’t get married! Barring any common law marriage situations, your partner won’t have much of a claim to your property without an agreement or a marriage certificate (the other side of the coin to the point I just explained). You still have to plan, however, or you’ll run into extra inconveniences when, say, you deposit a check from your grandma into your joint bank account.

You’ll Have to Explain It to Your Aunt Mildred — Again

One of my clients regularly asks me how I will explain to my daughter that her father and I aren’t married. I reply that my little lady will grow up in a wonderful world where kids have two moms, two dads, single moms and dads … all kinds of combinations of love. I remain unconcerned about my “story” with her, and much more concerned with creating a happy, healthy family for her to thrive in, regardless of titles. So, don’t even add this one to the drawback list — it’s really nobody else’s business!

Staying in that gray area of having a partnership without a marriage license isn’t for everyone. Some people choose to get married regardless of any financial benefit or drawback. But there is a growing population of “happily unmarried” life partners who are bucking tradition in favor of practicality. The key is to create a comprehensive plan for the life you want, whatever shape it takes.

Emily Boothroyd is a member of the DailyWorth professional network. Read more about the program here.