As Americans wait longer to tie the knot and with many couples opting to not marry at all, the need for sound financial planning for unmarried couples is growing. This provides investment advisors an opportunity to offer products and services cohabitating couples can take advantage of to protect their finances.
Financial advisors should inform their clients about the financial downside of choosing not to marry. They should be made aware they cannot take advantage of tax benefits, like filing a joint return. Neither can they avoid tax penalties associated with transferring asset ownership to their partners. Some clients may choose to overlook the downsides of not marrying for the benefit of not being legally responsible for the debt of their partner. A relationship that is unequal in this sense has its own pitfalls, of course, but a financial advisor can work with these couples to find fiscal solutions.
Whatever the perceived pros and cons of getting married or staying unwed, it is not the role of the financial advisor to act as a counselor. Financial planners should be direct, however, and clients should be informed of their options. Unmarried couples need to be honest with each other as well. They need to know what’s legally protected and what isn’t. Regardless of marital status, financial planning is essential for couples in committed, long-term relationships. Investment advisors should inform their clients of the importance of drawing up wills and naming one another as executor. Making sure property has been properly titled in both names and listing each other as beneficiaries on pension plans, retirement accounts, and insurance policies are services advisors can provide.
Advisors may have clients who choose not to maintain joint bank accounts, credit cards, or mortgage loans. If both parties are not listed, however, there is no legal right for one to look at account information registered in the name of the other. This is another challenge that gives investment advisors the opportunity to inform and educate clients about their options. In this case, a financial power of attorney may be recommended to allow for any contingencies. In the event couples should decide to wed and “make it legal,” planners are in a position to then offer their menu of services for marriage financial planning.
The trend away from legal marriage provides financial advisors with a new market in addition to their marriage financial planning services. There is great potential, here, for new business with opportunities to provide expertise. Investment advisors would be wise take advantage.
Summit Brokerage Services is part of Cetera Financial Group, RCS Capital Corporation’s (NYSE: RCAP) retail investment advice platform.
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