There are currently about 17 million people living with unmarried partners in the U.S. This includes both same-sex and different-sex couples. The number of unmarried couples living together nearly tripled in the past wo decades.
Sometimes it seems that married couples get all the advantages. They can file a joint income tax return. They can give each other an unlimited amount of property without gift or estate tax. They can draw on each other’s social security benefits.
However, in some ways it pays to be unmarried. The federal tax laws have rules to prevent certain types of transactions between related parties. Those rules do not apply if you are unrelated. The federal tax laws only recognize marriages, and then only between people of different genders. So, if you are an unmarred couple, or a married same-sex couple, you are not considered “related.”
This allows for some very simple tax planning strategies. For example, let’s say you bought stock in a technology company a few years ago. Unfortunately, you paid $100 per share for the stock and it is now trading at $40 per share. However, the company is stronger than ever and you know it is a great investment now. But, you are going to sell some other stock at a gain and would really like to sell your tech stock to harvest the $60 per share loss to offset the other gain. You could sell your tech stock to your partner. This would keep the stock in the “family” and yet allow you to harvest the loss.
Unmarried couples are in a unique position. Sometimes that can work to your advantage. An attorney who focuses practice in estate planning can help you take advantage of a system that usually works against you.
Compliments of the McGee Law Firm, Attorney Brandon McGee
Written By: The American Academy of Estate Planning Attorneys
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