Cohabitating vs. Married: How to Adjust Your Financial Plan as Your Relationship Grows

Cohabitating before marriage is the new norm for many young couples. It’s exciting, convenient, and can even be a smart financial move. But when it comes to money, there are some big differences between living together and being legally married.

Whether discussing this yourself or guiding someone you love through it, here’s our advice on what to watch out for—and what changes once you say “I do.”

Property Ownership: Who Really Owns What?

If you’re cohabitating:

Buying property together while unmarried? Be careful. Without a legal marriage, there’s no built-in framework for what happens if you break up. We’ve seen cases where one partner pays a higher percentage of the home’s price, but if the title doesn’t reflect that, it can lead to disputes or financial loss.

Planning Tip: Draft a cohabitation agreement and clarify ownership percentages. If only one person is on the mortgage or deed, ensure you are aligned with the exit strategies.

If you’re married:

Marriage generally provides automatic legal protections for property that is jointly owned. In most cases/states, spouses are entitled to any equity built during the marriage, even if only one person’s name is on the deed. That said, if one of you brought a home into the marriage, you’ll want to update your estate plan to reflect shared intentions. Adding your spouse to the title can have significant impacts down the line if you were to separate, so it’s important to be on the same page while understanding the benefits and risks when changing the title.

Of course, check with your estate planning attorney for state-specific property guidelines.

Shared Expenses: Splitting Fairly vs. Equally

If you’re cohabitating:

You’re probably figuring out how to handle bills, rent, groceries, and other day-to-day expenses.

Planning Tip: Don’t wing it. Create a shared budget and consider opening a joint account for household expenses. Talk openly about what feels fair. Equal splits don’t always make sense if incomes differ—fair doesn’t have to mean 50/50.

If you’re married:

Joint finances tend to get more intertwined. You may choose to fully merge accounts or maintain some separation, but now you’re filing taxes together and likely making long-term decisions (like saving for a house or kids).

Depending on your state’s rules, your income could automatically be considered joint income. You should be aware that there are benefits and risks to this joint treatment. Clear communication remains key, and it’s a great time to revisit your financial goals as a couple.

Estate Planning: Protecting Your Partner

If you’re cohabitating:

Here’s a common mistake: assuming your partner will inherit your assets if something happens to you. You may hold yourselves out as a married couple, but the law generally won’t. If you want to ensure that your partner inherits assets from you, you must get an estate plan in place. 

Planning Tip: At a minimum, make sure you have a will, name each other as beneficiaries on accounts, and consider setting up powers of attorney for health and finances. You can augment your plan with a revocable trust, and many states allow for certain types of Transfer on Death or “Lady Bird” Deeds to handle any real estate.

If you’re married:

Marriage simplifies this in many ways. Spouses typically become the default heir, and you gain more legal rights around medical decisions and inheritance. However, without an estate plan in place, the state’s default rules will apply regarding how your assets are split, and your spouse could end up sharing a portion of your estate with children or your extended family.  There are also many considerations if you have a blended family or significant assets. An estate plan is still essential. 

Debt, Loans, & Liability: What’s Yours vs. What’s Ours

If you’re cohabitating:

Your partner’s student loans or credit card debt don’t affect your credit score, but that can change if you co-sign or open joint accounts. Be cautious before mingling debt.

Planning Tip: Transparency is key. We recommend discussing credit scores and liabilities early on to avoid surprises.

If you’re married:

Debt acquired during marriage may become shared depending on your state laws. For example, in community property states, both partners may be liable—even if only one incurred the expense. This makes discussing spending habits, credit goals, and future financial responsibilities even more important.

Retirement & Benefits: Are You & Your Partner Covered?

If you’re cohabitating:

You’ll need to be proactive. If you want your partner to receive your 401(k), life insurance, or other benefits, you must name them a beneficiary. If something happens and you haven’t done this, they may receive nothing, even if you’ve lived together for years.

Planning Tip: Work with your estate planning attorney to cross-reference your will and beneficiary information to ensure you don’t have unintended consequences.

If you’re married:

Spouses are typically the “automatic” beneficiaries of retirement accounts unless waived, although simply saying “I do” does not mean “I do name you as my primary beneficiary of my 401(k).” 

You will still need a probate resolution to retain those funds if there is no named beneficiary. This may simplify up-front planning, but reviewing your designations regularly is still a good idea, especially after major life events. If you intend to leave retirement accounts to someone other than your spouse, perhaps directly to your children or to charity, you will likely need your spouse’s consent before making that beneficiary change.  As with many other areas in this article, transparent and open communication is key.

Tax Filing: More Choices, More Strategy

If you’re cohabitating:

You’re filing separately as single individuals, which limits some deductions and credits you could receive. On the upside, you don’t have to worry about your partner’s income affecting your tax situation.

Planning Tip: If you are sharing a home or expenses, make sure your tax filings accurately reflect your share of the real estate property taxes or out-of-pocket expenses.

If you’re married:

You now have the option to file jointly or separately. Joint filing can reduce your overall tax burden, but not always. It depends on your income, deductions, and student loan status. Work with a tax advisor or planner to model your situation’s best approach. 

For Families: These Are Teaching Moments

If you’re a parent or part of a multi-generational family office, this stage of your child’s life is a perfect opportunity to offer guidance. Consider using this moment to establish (or revisit) your family’s governance plan. Helping younger generations build strong financial habits now will pay off for decades.

We help families create communication frameworks and legacy plans that support the transfer of generational wealth and harmony. Connect with our team to learn more →

For Young Professionals: Start Strong with MissionForward

If you’re early on your financial journey, especially while juggling your career, debt, or family planning, you don’t need to have it all figured out. You need a plan that grows with you.

MissionForward is our new app planning program, designed for rising professionals who want tailored guidance, access to sophisticated investment opportunities, and a real advisor, without needing millions in assets. Sign up for the first look at our MissionForward app this Summer!

Our Final Thoughts

Cohabiting and getting married may look similar on the outside, but financially, they come with very different rules. Building a thoughtful, well-informed plan can help protect what matters most wherever you are in your journey.

Need help thinking it through? That’s what we’re here for.