Financial pitfalls for Same Sex Couples

If you are like most people, the last thing you want to think about is the dissolution of your relationship. You want to go forward on the assumption that you and your partner will be together forever. To think otherwise?and to plan for that possibility?may seem like a lack of conviction, faith, or commitment to your relationship.

In reality, creating a cohabitation agreement that details the division of property and other assets in the event of a break up can strengthen your relationship. When you know in advance how these issues would be handled it can eliminate anxiety about possible outcomes. More and more opposite-sex couples are choosing to create prenuptial and postnuptial agreements detailing how their individual assets would be divided and protected if the relationship ends. Creating this agreement, and other financial documents, places these important financial decisions firmly in your control. Without an agreement and comprehensive plan, your financial welfare and that of your partner could be left up to two lawyers and a judge.

Financial distress is a leading cause of divorce, and financial challenges transcend gender and sexual orientation. Differences in values about spending, saving, and retirement can cause friction in even the most stable relationships. Those differences may seem insurmountable during financial crises such as loss of employment, illness, or even welcome lifestyle changes such as the addition of children to a relationship, or a change in career.

In any committed, long-term relationship, how you deal with the financial implications of unforeseen and planned life changes can lead to disagreement, even separation. Working with a financial planner to create a comprehensive agreement and plan for your future brings many of these issues to light before it is a ?make or break? situation. Considering various scenarios and how you would prefer to deal with them financially before they come to pass allows you and your partner to work through any differences without pressure.

For example, you might assume your partner would take a leave of absence from work to care for you in the event of a major illness or disability, but she or he may prefer to stay on the career path. If you know this up front, you can set up safety nets such as long-term care insurance, which would ensure both of you are protected and secure.

Another important benefit to creating an agreement that details what is ?yours, mine, and ours? is the proper distribution of joint assets in the event of the death of one partner. The changes to Australian law do grant more protections for same-sex couples in terms of inheritance and superannuation benefits, but is the federal policy in line with your own plans? More importantly, is relying on the ?automatic transfer? provided by the new law enough to protect you or your partner from potential estate challenges from other surviving family members, such as parents or siblings?

Creating a comprehensive financial plan that, at a minimum, includes a cohabitation agreement, living will, and a will is absolutely essential for your financial wellbeing, and that of your partner. Working with a financial planner experienced in GLBT issues will not only protect your finances, but also help strengthen your relationship.