For Couples Skipping The Ring, It Pays To Plot Out Finances

When Robin Bunevich and her boyfriend, Alex Rivas, decided to buy a place together, they knew they wanted to live in their favorite neighborhood, Astoria, Queens. They found the perfect two-bedroom, two-bath apartment last year. The purchase was a big, exciting step for the couple, who had previously been renting a place together. And just as they were getting ready to start the new chapter together, the process also had them thinking about what would happen if they broke up.

"Both of our sets of parents — we both have fathers who are lawyers — and they're like 'Oh my God, what are you doing, you're not married. What happens if you break up?' And they each gave us advice," Bunevich says. "Both of them agreed that we should have a lawyer [to] write up some agreement between the two of us."

The agreement sets out what happens to the apartment if they split up.

"Obviously, you don't know what's going to happen in six months or in six years, but we basically worked out something that we both thought was fair," Rivas says. Essentially, the couple owns the apartment 50/50, and when it's sold, profits or losses will be split evenly after Rivas pays Bunevich the down payment she paid in full.

JOIN NPR'S 'YOUR MONEY AND YOUR LIFE' FACEBOOK GROUP

Bunevich and Rivas, together for 6 1/2 years, are a part of the rise in couples opting to live together and marry later, if at all. According to the Census Bureau, there were more than 8 million unmarried couple households in 2015 — three times as many as in 1996. Of these households, more than 3 million have children, a 162 percent increase from 1996.

As couples live together in greater numbers, old rules about how to divide finances and plan for the future don't fit the modern family.

The Money Talk

Up until recently, unmarried couples who lived together in Florida were breaking the law. The state was one of only a few that still outlawed opposite sex unmarried couples from living together.

And for many couples across the country, money can be just as taboo a subject as living together once was.

Diana Adams, an attorney in New York specializing in nontraditional family law, says it's common for couples to feel uncomfortable talking about finances.

"People often shy away from having these conversations about money in a really frank way," Adams says. "People often don't have that conversation and end up feeling disappointed or hurt down the line."

It's best, she says, to be honest and clear. "It's part of intimacy to have conversations that can feel awkward," she says. Adams suggests broaching it this way: Now that we are moving in together, I think we should talk about how we should divide up finances, to make sure we're on the same page. Is this a good time to talk about that, or would you like to set a time aside next week?

"I would suggest if that's not easy, people seek out the support of a compassionate professional such as a family mediator or lawyer to help broker that conversation," Adams says.

For couples with uneven income, she suggests sitting down to figure out whether finances should be shared equally or in proportion to income. Couples can then contribute their share to a joint household account for shared household expenses like rent or mortgage, groceries, utility bills or a family cellphone plan.

If one partner makes $75,000 and the other makes $25,000, for example, they could contribute 3/4 and 1/4 of the total budget. Alternately, Adams says, they could each contribute 30 percent of their monthly take-home pay to a joint bank account, so that they are each contributing in proportion to income. Couples who prefer not to share a bank account can set up a spreadsheet formula. When they each pay for an expense, they track it on a spreadsheet that automatically tabulates who owes more money, and that person can pay the next expense.

For Katy Newell, 33, and her partner of 11 years, Ben Nadler, 37, record keeping of household expenses eventually became a hassle. "It became clear that if we really wanted to be partners and share a life together, that inequities in income or contributions, if we continued to make that an issue, would just get in the way," Newell says. "There will be times when one of us will be unemployed, working part time, or in school — income goes up and down — and keeping track of that in the long term seemed really impractical."

There are times when one person will be making less than the other. "Then that person goes out of his or her way to make sure that we're doing more around the house or taking care of the dogs and making sure the person who is working more doesn't have to deal with a lot of that stuff," Newell says. "We're equal partners in this life we have together."

'A Whole Lot Of Little Things To Think About'

Unmarried couples who live together — no matter for how long — do not enjoy the same legal and financial rights as people who are married.

"Without marriage," says Sheryl Garrett, a financial planner and author of Money Without Matrimony, "there are a whole lot of little things we need to think about."

The Supreme Court in 2015 ruled that same-sex couples could marry and thus afforded all the financial benefits of marriage, but millions of unmarried gay and straight couples are still left trying to approximate the kinds of protections and benefits that married couples get automatically.

One big thing that marriage creates is a framework for breaking up.

Garrett suggests creating a legal cohabitation agreement similar to a prenuptial agreement. "The agreement spells out what divorce court spells out for married people when you break up," Garrett says. "It maybe has a one-up on divorce because the couple writes the terms of the deal."

Agreements can cover everything from how to divide assets to the terms of financial support after a split.

Garrett suggests unmarried couples draw up other legal documents as well. Without a will, for example, a committed couple who built a life together would be considered legally unrelated to each other. Inheritances generally go to next of kin, which for a married couple is a spouse. An advance directive will allow partners to make medical decisions on the other's behalf. A durable power of attorney allows the partner to act on the other's behalf for things like legal and financial matters.

And, she says, don't stash away these documents and then forget them. Health care documents should be easy to retrieve in a hurry. There are also online storage sites and state registries.

Garrett remembers a long-term, same-sex couple that did not have these documents prepared. When one partner died from complications with AIDS, the minister who his parents hired used his death as a stump speech against homosexuality.

"He still would have passed away, but his survivor wouldn't have lost control of his home, his partner's final health care decisions, the burial, the funeral arrangement," Garrett says. "All of those things can be spelled out in legal documents and left for your loved ones."

Garrett also suggests:

• If your partner drives your car on a regular basis, list him or her as a driver on your insurance.
• If you're not an owner of the home your partner owns, get renter's insurance. That doesn't feel very equal, she says, but you should protect your stuff in the event that it blows away or burns up.
• Make sure your partner's name is listed as the beneficiary on retirement accounts and life insurance.

Planning For The Long-Run

It may seem that nontraditional families have lives that are complicated, so their financial lives are similarly complicated. But others, like Sarah Wright of Unmarried Equality, argue that their financial lives are complicated because financial benefits favor marriage. There are more than 1,000 federal benefits and protections for married couples.

With everything from health insurance to Social Security survivor benefits, benefits come pre-baked for married couples. Spouses can share health insurance. When a married couple sells a house, the amount of money that can go toward the capital gains exemption is doubled. Similarly, surviving spouses can claim an estate tax exemption not available to surviving partners in an unmarried couple. Married couples enjoy unlimited transfer of assets, free from tax.

"Why are any of these ... things based on marriage anyway?" asks Sarah Wright of Unmarried Equality, an advocacy group that does not oppose marriage but fights for fairness for unmarried people. For unmarried partners, "there's no structure and there's no standing," she says. "Your relationship is totally unrecognized and you're left to fend for yourself."

When one spouse dies, for example, the widow or widower can qualify for Social Security surviving spousal benefits. Couples who aren't married or aren't considered common-law spouses in the states that recognize them can't consider this income when planning for retirement. Often couples will increase saving and use life insurance as a financial planning tool instead.

When it comes to having children, Adams, the family lawyer, suggests that unmarried couples revisit how they share their finances and whether the existing arrangement will still work if one person takes parental leave or stays at home for an extended period.

JOIN NPR'S 'YOUR MONEY AND YOUR LIFE' FACEBOOK GROUP, an online community featuring stories from some of the best investors and financial experts on the planet along with crowdsourced wisdom curated and overseen by NPR reporters and editors.

Copyright 2016 NPR. To see more, visit NPR.