4 Estate Planning Must-Haves for Unmarried Couples—Part 1
A common misconception about estate planning is that you only need to begin planning after you get married. However, in reality, every adult, no matter their age, income level, or marital status needs some fundamental planning in place to keep their loved ones out of court and conflict.
In many cases, estate planning is even more critical for unmarried couples because even if you’ve been together for decades and act just like a married couple, you likely aren’t viewed as one in the eyes of the law. In the event one of you becomes incapacitated or dies, not having any planning in place can have disastrous consequences.
If you’re in a committed relationship and have yet to get—or even have no plans to get—married, the following estate planning documents are an absolute must:
1: Wills and trusts
If you’re unmarried and die without planning, the assets you leave behind will be distributed according to your state’s intestate laws to your family members: parents, siblings, and possibly even other, more distant relatives if you have no living parents or siblings. The state’s laws would provide NO protection for your unmarried partner. Given this, if you want your partner to receive any of your assets upon your death, you need to—at the very least—create a will.
A will details how you want your assets distributed after you die, and you can name your unmarried partner to inherit some or all of your assets. Some assets like life insurance, pensions, and 401(k)s, are not transferred through a will and instead will go to the person named in the beneficiary designation, so be sure to name your partner as beneficiary if you’d like him or her to inherit those assets.
Although wills and beneficiary designations offer one way for your unmarried partner to inherit your assets, they’re not always the best option. First and foremost, they do not operate in the event of your incapacity, which could occur before your death. In that case, your partner may not have access to needed assets to pay bills, or he or she could potentially even be kicked out of your home by a family member appointed as your guardian during your incapacity. Furthermore, a will requires probate, a court process that can take quite some time to navigate. Finally, assets passed by beneficiary designation go outright to your partner, with no protection from creditors or lawsuits. To protect those assets for your partner, you’ll need a different planning strategy.
A far better option would be to place the assets you want your partner to inherit in a living trust. First off, trusts can be used to transfer assets in the event of your incapacity, not just upon your death. Trusts also do not have to go through probate, saving your partner precious time and money. What’s more, leaving your assets in a continued trust that your partner could control would ensure the assets are protected from creditors, future relationships, and/or unexpected lawsuits.
Consult with us for help deciding which option—a will or trust—is best suited for passing on your assets.
2: Durable power of attorney
When it comes to estate planning, most people focus only on what happens when they die. However, it’s just as important to plan for your potential incapacity due to an accident or illness. If you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. This person could be a family member who doesn’t care for or want to support your partner, or it could be a professional guardian who will charge hefty fees, possibly draining your estate.
Since it’s unlikely that your unmarried partner will be the court’s first choice, if you want control over who manages your finances in the event you become incapacitated, you would use a document called a durable power of attorney.
Durable power of attorney is an estate planning tool that will give whoever you name immediate authority to manage your financial matters in the event of your incapacity. They will have a broad range of powers to handle things like paying your bills and taxes, running your business, collecting government benefits, selling your home, as well as managing your banking and investment accounts.
Granting a durable power of attorney to your partner is especially important if you live together, because without it the person who is named by the court could legally force your partner out with little to no notice and leave your partner homeless.
As your Personal Family Lawyer®, we can guide you to make informed, educated, and empowered choices to protect yourself and the ones you love most. Contact us today to get started with a Family Wealth Planning Session.
Next week, we’ll continue with part two in this series on must-have estate planning strategies for unmarried couples.
This article is a service of Levi Alexander, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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