During the last couple of decades, there has been a substantial rise in population of unmarried couples in Singapore. Even the couples who plan to get married prefer to go the phase of an unmarried live-in relationship. This gives both of them an equality in freedom towards everything and they are financially independent of each other too. So unlike married couples, it is not the responsibility of any one person to contribute towards the expenses of the house and everything involving it. But this type of living can create a lot of concerns on the financial grounds. And here are the top 3 concerns with regards to that.
1. Joint Accounts and Assets:
Not every unmarried couple’s story is a happy ending and such a situation can really result in disputes if you are holding joint accounts. It can get worse if you have purchased a home or invested in some other assets. Most unmarried couples have a joint account where both equally contribute towards their livelihood. And assets like a car, home electronics, furniture, etc become part of joint investment too. So in situations where you are to discontinue from a relationship, chances of litigation are more likely to arise. So to avoid any such hassles, it is best to maintain separate accounts and assets.
The best solution is to maintain a separate account for your individual income. You can have a separate joint account where both of you can pool some money towards household expenses. Make sure the contribution is equal to avoid any issues in future. The money in this account must be used only towards utility bill payments, house rent, groceries, and other things that are used commonly by both. This also includes any repayment that you both owe to a money lender.
Avoid contributing money to buying bigger assets such as a car or a house. Because these things require being registered in the name of one person. But if you still want to invest in them, you better consult a lawyer or a money lender such as Credit Hub who can guide you. Make sure the ownership deed clearly shows both your names as owners. So when you are planning to sell it, you both are entitled to the benefits.
In case you are buying a house then you must ensure to keep all the records carefully to avoid tax implications. You must also understand that if one of you passes away, the other becomes natural heir to the whole of the property. There is no provision to pass the benefits to your family members in such a situation. If your house is on loan, the repayment to money lender will be equal responsibility of both. But if one of you dies, only the surviving partner will be a 100% beneficiary. So no matter how much you have contributed, your family members or relatives can never get the benefits.
Another mistake most unmarried couples do is allowing to become financially dependent in order to take care of household and stuff. One thing you must understand is that if your relationship comes to an end, the dependent partner will have to go through a lot of financial difficulties. So this is something which you must talk it out before taking a big step.
2. Income Tax Issues:
As per federal income tax provisioning in Singapore, a married couple is entitled to marriage tax bonus. But unmarried couples continue to pay their individual taxes and hence cannot enjoy additional benefits. If you are living with a partner and also support a dependent, you can claim the title of ‘head of household’ while filing the tax. So you can easily benefit from dependent care and earned income credits. But the other partner may not be able to enjoy same benefits that can lead to further disputes. So it is always better to get advice from a consultant on how to go about it. This will prevent you from getting into unnecessary hassles or differences.
In case of an unmarried couple, if there is any joint asset, both will have to share the burden of paying tax equally regardless of each one’s income status. So if your earning is lower than that of your partner’s, you will still have to pay the same amount of tax. You will certainly be missing on a lot of tax benefits as an unmarried couple. It is best that you both are aware of the consequences and thus avoid buying joint assets that attract taxes.
3. Health Issues and Finance Related to it:
If you are an unmarried couple, one thing you must understand is anyone among the two can come across health issue. It can be severe enough to lead to death or any kind of disability. And when that happens, your dependency on the other person increases. So your partner will get power of attorney and he or she can take a financial decision on your behalf. There is also a health care proxy in Singapore that allows your partner to make medical decisions too.
So in a situation where you become physically or mentally incapable, you will also lose the power over everything including assets and joint accounts. And eventually, in case of your death, the only beneficiary will be your partner who is still a non-relative. Therefore, it is always best that you have an arrangement done by consulting an attorney much before such situation arises.
To avoid any inconveniences, it is always best that you have individual health insurances. The drawback for an unmarried couple is you can never have your partner’s name on the dependents list. So even if you have the best insurance policy in the market, your partner cannot be covered unless married. If you get sick, the burden is entirely on you and you cannot really demand your partner to take care unless he or she is willing to.
The ideal solution here is to approach a money lender to support your medical expenses. And once you recover, the repayment to the money lender is completely on you. So in spite of a living partner, the financial burden on your medical expenses is only on you.