KATHMANDU: As more and more youngsters experiment with live-in relationships to gauge the ups and downs of co-habitation, they often overlook the financial aspect of living together. Ignoring it can not only cause rifts, but in case of a breakdown, render the partners worse off financially.
Since most institutions recognize only married couples and blood relatives for legal transactions, it can become a financial nightmare for either of the partners. To ensure that a break-up does not force you to start afresh financially, here are some points to keep in mind when you decide to live-in.
1. Do not pool resources
Even among married couples, it is not a good idea to merge finances for some time after the wedding. For live-in partners, this is more true because of the open-ended nature of relationship. So, instead of a joint bank account, it is better to have separate accounts. For household expenses, split and assign responsibility for payments in accordance with the salaries. If the responsibilities are not fixed at the start of the relationship, it can cause resentment as one partner may end up paying more than the other.
2. Do not make investments or buy assets jointly
If you plan to buy a house, you may not be able to get a joint home loan because the banks offer it only to spouses and specific blood relations. You could come to an agreement where one partner takes the loan, and the other contributes to the loan EMI, and both have joint ownership, but in such a case, it is important to draw up legal documents defining the arrangement clearly. As for other investments, it is best to do so separately, whether it’s building a debt equity portfolio or linking these to goals. Even if you have a child and are saving for his goals, do so individually, though you may pool in the resources later.
3. Secure your risks separately
Buy adequate health insurance separately as you may not be able to get a family floater plan. Each partner should have Rs 5-7 lakh worth of health insurance, and if you have the resources, increase it to Rs 10 lakh. Buying life insurance can be a problem as insurers recognize only spouses and blood relatives as nominees, but if you have a child, he can be made a beneficiary. However, if both the partners are earning sufficiently, there may not be any need to buy life insurance at all. If you have liabilities like a home loan, buy an insurance linked to the loan.
4. Plan your own retirement
While you may decide to get married and stay together in retirement, it is also a possibility that you may not. So, start saving for your own retirement assuming that you will be alone and calculate the expenses and life span accordingly.
5. Inheritance, nomination
Most financial and other institutions do not recognize live-in partners when it comes to nominations. Also, if you die intestate, your partner will not have the same inheritance rights as a married partner, even though court rulings have accorded some rights to live-in partners if they have been staying together for a long time. In such cases, you could draw up a will, specifically mentioning which assets you want to leave for your partner, and if you change your mind, the will can be altered at a later date. ET