Figuring out the financial implications of marriage can be a challenge. Do you merge your money completely? Do you keep some or all of the accounts separate? And who takes care of which household financial chores?

As difficult as marriage and money can be, things are even tougher for unmarried couples. There's a maze of legal, financial, and emotional issues to navigate, but sometimes it's difficult to get good advice in a society that's geared toward married partners.

Kim and I have been dating for nearly six years now. We've been living together for almost five. For that entire five years, we've been slowly negotiating the financial implications. At what point to we designate each other beneficiaries in our wills? On our retirement accounts? What things do we purchase together? How intermingled do we allow our bank accounts to become? Who pays for which utilities? Or do we split the costs equally? What about groceries? Pets? Vacations? Gifts?

In our case, I've been using Money Without Matrimony as a resource. This book by Sheryl Garrett and Debra Neiman (both of whom are certified financial planners) provides tons of advice to help unmarried couples plan their financial futures together.

Money Without Matrimony

According to the 2010 U.S. Census, 6.6% of American households contain “unmarried partners”. Of these, 88.4% are opposite-sex partners and 11.6% are same-sex partners. Garrett and Neiman divide these groups into younger heterosexual couples, older (retirement-age) heterosexual couples, and same-sex couples. Each group has specific concerns, and Money Without Matrimony takes care to explore issues unique to each situation. The authors write:

If unmarried couples take the right approach to financial planning, put in place proper legal documentation, and capitalize on existing laws, it's possible to nearly equalize the inequities of a system geared toward married couples.

Money Without Matrimony covers a broad range of topics, exploring each from the perspective of the unmarried couple. The book covers:

• Communication. The book stresses that it's important to go beyond just discussing who's going to pay the bills this month. Couples need to discuss their money blueprints, and they need to plan their future together.
• Partnership. Money Without Matrimony contains one of the best explorations of the joint or separate finances debate I've ever read. The authors discuss a variety of different ways to merge household finances. (This is good info even for married folks.)
• Taxes. This is one area where, with proper planning, unmarried couples have an advantage over married couples. The book explains how to exploit this.
• Estate planning. If they don't plan ahead, unmarried couples can face a world of woe when one (or both) partner dies. It's vital to document things completely and correctly in order for your wishes to be followed. The authors cover wills, trusts, directives, and more.
• Other issues. Money Without Matrimony looks at more than just financial issues. The authors also explore the complications of children, legal issues such as domestic partnership agreements, and so on.

The book also covers insurance, retirement planning, children, and more. A lot of these topics may seem boring, I know, but they're crucial for every couple, married or not.

One of the strengths of this book is that it looks beyond the dry financial planning aspects of living together and addresses some of the psychological and emotional issues that can arise in relationships. Plus, it's peppered with anecdotes that illustrate challenges faced by unmarried couples.

Drama in Real Life

As a guy who likes stories, my favorite parts Money Without Matrimony are the real-life examples of how couples deal with actual dilemmas. Here's a prime example of the type of story the book includes (and the issues facing unmarried partners):

Jordan and Betsy shared a home that Jordan initially owned individually. When the couple moved in together, though, they split everything 50-50 and always talked about “their” home and their future together. Betsy just assumed Jordan had changed the deed on the house to include her. It never occurred to either of them, in fact, that the home didn't belong to both of them. Two years into their relationship, Jordan popped the big question, asking Betsy to marry him. She said yes, but no date was set for the wedding. Jordan's family still hadn't warmed to Betsy, so the couple thought it best to wait for a while before tying the knot.

Not long after proposing to Betsy, Jordan died in an automobile accident. Naturally, Betsy was upset and distraught. After the funeral and reception, friends of the couple took her out to dinner. When Betsy finally arrived back at her home, Jordan's older brother and father were in the process of moving Betsy's belongings out of the house and into a rented van. Betsy was horrified to learn that her partner had left the house to his brother, according to the terms of his will drafted six years earlier — long before she and Jordan had met. Betsy buried her partner and lost her home in the same day, and she had no recourse.

This story makes my blood boil (and yet it's unfortunately all too common), but Jordan and Betsy could have avoided this tragedy if they'd planned ahead. That's what Money Without Matrimony is all about: Making sure that unmarried partners take the steps necessary to share their finances together, both now and in the future.

Living Together

Money Without Matrimony is a great book. It's non-judgmental, practical, and packed with advice. Unfortunately, it's also old and out of print. The book was published in 2005. Its age doesn't invalidate the relationship advice, but some of the specific financial examples and recommendations are no longer relevant.

For more current money and legal help, I recommend Living Together: A Legal Guide for Unmarried Couples by Frederick Hertz and Lina Guillen. This book from NOLO Press, now in its sixteenth edition, covers many of the same technical topics as Money Without Matrimony, but from a more academic and less personal examples. (Even the examples and anecdotes in Living Together are academic, drawn from actual legal cases instead of from the authors' experiences.)

This book is adamant that unmarried partners must spell out their financial and property arrangements using a “living together contract”. (If “contract” sounds too formal or stuffy, call it a “living together agreement”.)

Most unmarried couples — and that includes me and Kim — have informal verbal agreements regarding their joined (and unjoined) financial lives. Kim and I bought our current home together, for example. We're both listed on the deed. I fronted all of the cash, however, and Kim is paying me a “faux mortgage” at the rate of $500 per month. This arrangement is sensible to us, and we both understand it. But it's not documented anywhere (except this blog post, I guess). (When I was married, I carried a faux mortgage to Kris for a while. The difference in that situation, though, is that we were married.)

Living Together argues — and rightly so — that the kind of agreement that Kim and I have is a recipe for disaster. If we something goes wrong, whether it's a death or a “divorce”, neither of us has any legal recourse. If we don't intend to marry, then it's in our best interests, as individuals and as a couple, to formalize our financial relationship.