A Brooklyn financial planner has a message for the 11 million Americans living with an unmarried partner: com-mingle your assets if you want to keep your mate.
“One pot is almost always better,” said Ron Palastro, a certified financial planner who specializes in working with unmarried couples. “When two people come together, they start to share common interests and goals.”
Palastro claims acceptance of the one-pot approach – that is, co-mingling assets into one account – is also a good predictor of whether a couple, unmarried or about to be married, will work out.
Those who do arrive at a one-pot approach usually stay together or get married, he said. Those who don’t, who want to keep all assets and debts separately, usually fail as a couple.
The issue is becoming much more important these days as some 11 million Americans live with an unmarried partner, according to the U.S Census Bureau. The number of unmarried couples increased tenfold between 1960 and 2000, the Census Bureau reports, and went up by 72 percent between 1990 and 2000.
While most unmarried couples take pains to talk about general finances – whether they can afford to live in a lifestyle both are comfortable with – many fail to discuss the painful decisions they’ll face with everyday economics.
The Denver-based Financial Planning Association says four of the most common of these problems faced by couples are debt, how property will be purchased, household expenses and children.
“Many of the problems are emotional,” says Gary Schatsky, a lawyer and a financial adviser in Manhattan. Schatsky says unmarried couples need “a common vision,” in coordinating how they invest and borrow.
“Say one has a money market account earning four percent and other has a credit card debt that burdens one of them with 15 percent interest. It certainly makes sense for the couple to use the money market to pay off the debt,” he explains.
“Years ago, when you entered into a marriage, it was assumed that all debts and properties became the common debt and property of both,” Palastro said. “But what I’m finding is that a lot of the couples want to keep their past history separate. And if one has money, that remains in one’s name separately.”
Schatsky disagrees with Palastro’s theory that the failure of unmarried couples to co-mingle assets dooms their relationship. He says it is not a predictor and those assets can be separate as long as there is agreement on the big picture.
Fifty-five percent of different-sex co-habiters marry within five years of moving in together, according to a seven-year old study published in the Annual Review of Sociology. Forty percent break up and 10 percent will continue the unmarried relationship.