Domestic Partnerships: Factors to Consider
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When you and your significant other are planning the next steps in your relationship, you may find it makes sense financially to remain unmarried. Here are some factors to consider when contemplating whether a domestic partnership is the right choice for you.


Common Law Marriage

  • In a handful of states, your partnership may be recognized as a common law marriage once you’ve lived together for a specific period of time (time period varies by state) and met other conditions.
  • Depending on the state, common law marriages and registered domestic partnerships may also provide similar legal rights to those of married couples, including tax benefits, medical power of attorney, and more.

Work Policies

  • A majority of employers in the Corporate Equality index — including health care coverage and the selection of a beneficiary on your retirement and life insurance — for both same-sex and opposite-sex couples, according to Liz Cooper, Associate Director, Corporate Equity Programs with Human Rights Campaign.
  • Domestic partnership benefits that companies offer may be considered taxable income, unlike pretax benefits for married couples and dependents.

Having Children

  • If you are adopting a child, you may be eligible for a tax credit, even if your partner is the biological parent. However, if you’re married, the tax credit may not be available when adopting a spouse’s child.
  • If your domestic partner wants to adopt your child from a previous relationship, you may need the other biological parent to voluntarily terminate parental rights or have the state terminate his or her parental rights if certain conditions are met (which vary by state).

Assets and Inheritance

  • Domestic partners — with the exception of partnerships in states that recognize common law marriage — do not have guaranteed rights or access to assets and accounts unless they have been specifically designated in a will, power of attorney or another legal document.
  • Assets or inheritance designated for your domestic partner may not have the same tax protections as assets passed between married couples.

Taxes

  • In a domestic partnership, you do not receive the same tax benefits of marriage under federal law, which may result in a variety of reduced benefits or tax penalties depending on your financial situation.
  • Filing taxes separately — especially if you and your partner are in different tax brackets or if your combined income would put you into a higher tax bracket — may help you receive a lower tax assessment or higher tax return without adhering to the special rules of a couple that is married and filing separately.
  • If you have kids, you may also be able to choose which of you claims your child(ren) at tax time, depending on how it might affect each of your separate taxable incomes.

Medical Care

  • In a domestic partnership, you may not have access to medical records or other important information if your domestic partner falls ill, unless you have taken proactive measures.
  • Make sure you each have medical power of attorney and draft other legal contracts to protect your rights.
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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.