Different Lenses
At the same time, it’s important to remember that different family members—and especially those from different generations—tend to view money and its proper uses through different lenses. One spouse may be a dedicated saver, while the other gets an actual hit to the pleasure centers of the brain from making a purchase. When financial discussions are necessary, keeping these different perspectives in mind and maintaining respect for all points of view can lead to more productive conversations and decisions. But it’s key to have open, honest and respectful communication among all parties.

The Gray Divorce/Cohabitation Conundrum
Baby boomers are the largest generation in American society, and they’re entering the retirement ranks at an increasing rate (not to mention moving in together unmarried at a faster rate than people in other age groups). This is happening at a time when eldercare, with all its attendant healthcare, social, financial and emotional challenges, is becoming a concern for them and their Gen X and millennial children.

There are several factors at play when older people decide to live together without getting married or remarried.

Social Security. Older women who remarry typically lose spousal benefits that contribute an important source of their monthly income. Also, unmarried couples may pay less federal income tax on Social Security benefits than those who file joint returns.

Financial aid for their children. For persons with college-age children, the greater combined household income in a marriage may reduce the financial aid available to their kids at college.

Estate planning. People who want to pass assets to their children or grandchildren may find their inheritance plans complicated if they have a new spouse.

Alimony. People who remarry can lose alimony payments from an ex if they live in non-community property states.

Medical expenses. Having a spouse means you take on responsibility for someone else’s medical expenses. Unmarried couples may have more options.

There are emotional, financial and legal drawbacks to living arrangements among unmarried people. For one thing, it’s uncertain whether the relationships will last or how they might affect other family members, especially how new situations will affect the rights of financial beneficiaries. When it comes to legal status, in most states, marriage laws supersede cohabitation agreements when it comes to the disposition of estate assets, tort claims and other legal remedies.

Older People In New Relationships
When older people enter new relationships, they’ll need to understand what goals and values they share with their new partners and how the relationship will affect others. It’s also important for them to be able to share their differing attitudes toward financial matters openly and without judgment.

Beyond that, there are some important practical questions they’ll have to answer.

• Are their wills up to date? Especially when it comes to any language about the exes?
• How would they like to divide assets among themselves and their children or other heirs?
• What is their new partner’s tax filing status?
• Does their new partner have life insurance or retirement accounts, and who are the beneficiaries? What about the pensions?
• Who is the healthcare proxy? How involved do they want their new partner to be in their healthcare decisions?
• Who will be their primary caregiver if they become incapacitated?
• Who holds their power of attorney?
• Is their new partner currently receiving Social Security benefits from an ex-spouse? Alimony?

Cohabitants should also consider having a formal “living together” agreement. These can afford important protections to partners who aren’t married, since in most states non-marital unions do not enjoy the “defaults” provided by marriage. These agreements can provide guidance for matters such as:

• Who pays for what, and how much?
• What is separate property and what is commingled?
• How should commingled property be distributed if the relationship ends?

Though these may sound like plans for a worst-case scenario, these agreements should be approached with an attitude of joy for the relationship, concern for the rights of both parties, and respect for everyone involved. These plans should clarify what is being agreed to, how the agreement will be put into action, the functioning of mutual accountability, and the desired outcome of a successful relationship.