Couples are re-examining their options, and some choose neither

Every so often, Nora McMahon and her boyfriend of eight years, Kevin Poulsen, joke that they should get married in order to get new knives.

 

"But most of the time, not being married works for us," she said. "We're committed. It's not like we're trying this on for size."

 

When Illinois' civil union law took effect in June, this Chicago couple had another option. Publicity surrounding the law primarily centered on the gay community, but the civil union law applies to straight couples too.

 

Illinois was the sixth state to recognize unmarried partners as "spouses," although the terminology varies from state to state. Illinois' ruling has legal and financial implications, and those sent unmarried couples to their attorneys and financial advisers with questions.

 

After getting some of those questions answered, McMahon, 35, and Poulsen, 36, decided a civil union wasn't for them, either.

 

But their situation demonstrates the options available to couples these days and the questions they are asking. Such as, what are some of the legal differences between a marriage and a civil union? What are advantages for couples like McMahon and Poulsen of doing neither? And how do a couple decide which is best for their situation?

 

"First, you look at the facts: your ages, jobs, benefits, health status, pensions, credit scores, previous marriages, ages of kids," said Mark La Spisa, president of Vermillion Financial Advisors Inc. in South Barrington. "Then you add in the emotional side of it: religion, family, values and the fears that have kept you from marrying."

 

Why form a civil union?

 

The No. 1 reason straight couples choose a civil union, said La Spisa, is health insurance. If one person has government-sponsored insurance, a partner can be added to it. If the employer is private, that is not always the case. This proved to be a key in the decision of McMahon and Poulsen.

 

Hospital visitation of unmarried partners was a rallying call for civil union advocates. But here's the asterisk: The federal Centers for Medicare and Medicaid Services Conditions for Participation rule that took effect in January made this moot by declaring that the patient chooses his visitor, regardless if he is a spouse, unmarried partner or Uncle Fred.

 

The civil union law gives you the right to visit your partner in the hospital and receive his medical information, but this right may not be recognized in another state. So if you have a car accident in Nebraska, for example, you may have a problem if one of you is incapacitated and cannot designate a partner as a visitor.

 

A civil union is your answer if you want to cement your relationship but would lose benefits by remarrying, said attorney Michael Whitty of Vedder Price in Chicago.

 

"Your divorce agreement may say, for example, that your alimony ends if you remarry," he said.

 

The prospect of losing spousal Social Security benefits based on your ex's income can be an incentive to choose a civil union instead of a second marriage. If you were married to your ex for at least 10 years and he made more than you did, you can receive a benefit equal to 50 percent of his Social Security benefit when you turn 62, unless you remarry. This is gender-blind and your ex does not have to die for the benefit to kick in.

 

If you have a child heading to college, heads up. Remarriage means your new spouse's (the child's new stepparent's) income is counted on FAFSA (Free Application for Federal Student Aid), the form used by many colleges to determine students' eligibility for aid, scholarships and work-study programs. Even if he has no intention of helping with your kid's college expenses, his income can wreck the kid's aid eligibility. But the feds don't count him if he is your civil union partner.

 

Signing a civil union license gives you co-parenting rights that used to be restricted to married couples. If you split up, custody and visitation rights apply too.

 

Why marry?

 

Getting married offers different pros and cons.

 

"You get a spousal Social Security benefit," said La Spisa. "You get a big discount on long-term care insurance, often as much as 2-for-1. You can roll over your deceased spouse's retirement account into your IRA and treat it as your own without being taxed."

As a civil union partner, you are entitled to your partner's government pension, but it may take a marriage to get his pension from a private employer.

 

"I had one couple who was happily 'committed' for years until he got cancer," said La Spisa. "Then they got married so she could get his survivorship benefits."

 

Income taxes are tricky, said the experts. The civil union law allows you to file state income tax returns together, but not federal.

 

"The general rule of thumb is if one spouse makes a lot more than the other, you will benefit by filing as a married couple," said La Spisa. "But if your incomes are similar, you benefit by filing separately and unmarried. But there are so many variables."

 

If your income is low enough to qualify you for the earned income tax credit, combining your income with a spouse's may disqualify you.

 

Alone but together

 

There are plenty of reasons to nix marriage and civil union.

 

"You don't have to go through the ugliness and expense of a divorce," said La Spisa. Undoing a civil union is cheaper, but stressful too.

 

But you don't have to be hitched to get same-household discounts on auto, homeowners and umbrella insurance.

 

If your partner has a gambling addiction, remaining single can protect you from his debt. Although the civil union law does not specify debts, it says that as a civil union partner, you have the same "legal obligations" as a spouse.

 

Whatever you decide …

 

Married, unmarried or linked by a civil union, every couple should do estate planning to cover inheritance and end-of-life issues, said the experts.

 

The combination of a trust, will and health care power of attorney trumps all, said Whitty.

 

"The trust covers assets you put into it when you draft it," said Whitty. "The will covers the small assets not listed or purchased since you drafted the trust."

 

"Done," said Lynn Reid about a plan with her partner of 10 years, Jerry Baltes. "Things from my family go to my daughter, but we leave the business we co-own to each other."

 

Until then, Reid owns their home and they have assets that they brought from previous marriages. The St. Charles couple are in their 60s. They, too, decided to remain in their current situation after examining the civil union option.

 

Society says

 

For some couples, marriage and a wedding meet family expectations. But society has changed in recent years.

 

"Our families and friends used to ask when we would get married," said McMahon. "But it's OK in today's (society) to be living together. One friend told me it is 'so Swedish of you.' Now, they're more likely to ask if we're having a baby. 'Your biological clock is ticking. ...'"

 

"The 'living with someone' stigma is gone," said Reid. "We used to say we were engaged, but then it just became insignificant. At our age, people assume we're married anyway."

 

"It's not a piece of paper," added Baltes. "It's a state of mind."

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