There are many reasons couples decide not to get married. Some choose to live together before getting married, while others see no need to walk down the aisle to make the relationship official. According to a Pew Research study, there is a growing acceptance of cohabitation in America.
The study also revealed that the number of adults in the U.S. who are currently married is down from 58 percent in 1995 to 53 percent today. Over the same period, the number of Americans living with an unmarried partner increased from 3 percent to 7 percent.
In spite of these trends, unmarried couples may not realize that they do not have the same legal rights as marriage partners. This article will explore estate planning for unmarried couples and why it should be a priority for you and your significant other.
The law protects spouses and children in the absence of a will or an estate plan. However, no such safeguards are in place for surviving unmarried partners.
When you have an estate plan in place, you are able to dictate who gets your assets after your death and who can make decisions for you if you cannot make them for yourself.
Here are two scenarios to illustrate why it is so important that you and your partner create an estate plan.
#1 If you die without an estate plan, your partner will not be entitled to receive your Social Security or other benefits, any notice of probate proceedings, or any homestead rights usually granted to married spouses. Your partner also may not be able to inherit any of your property or belongings.
#2 If you are unconscious or otherwise unable to communicate, your partner will not have the legal authority to make decisions for you or even receive medical information from the doctors.
The good news is that you can take care of these concerns with an estate plan.
Here are nine steps unmarried couples should take to safeguard their future.
#1 Discuss your wishes for your estate with each other. No one likes to talk about what happens to their assets after they die. It is an uncomfortable topic at best. But having a frank discussion now about who you would like to get what can alleviate many problems and concerns later for the surviving partner.
#2 Write a letter of instruction. Especially in today’s digital world, a letter that tells your partner and your estate representatives the details they need to know to manage your estate can be invaluable. This letter might include the following:
#3 Tell family members about your estate plan. To avoid any unpleasant surprises, let your parents, siblings, and children know that you have included your partner in your estate plan.
#4 Own property jointly. You can avoid probate, which can be expensive and time-consuming, by owning property together with your partner. With joint ownership, if one tenant dies, the surviving tenant owns the entire property.
#5 Designate your beneficiaries. An unmarried partner will not have access to your bank accounts, retirement funds, or life insurance unless you have named them as the “pay-on-death” beneficiary. Review these accounts and make any changes that reflect your desires for your estate.
#6 Name a Durable Power of Attorney. As part of this critical step, you can appoint one or more individuals to act on your behalf in legal and financial matters in the event you are unable to manage them yourself. Without a power of attorney document in place, your partner might have to go to court to seek the appointment of a conservator. Not only would this take time and money, but it would cause your partner more stress at an already difficult time.
#7 Appoint a Health Care Proxy. By naming your partner as your health care proxy, you enable them to make medical and end-of-life decisions for you if you cannot make them for yourself. Without this document, your family members may make medical decisions for you without your partner’s knowledge or agreement.
This document will also give your partner access to your medical information. Without it in place, the Health Insurance Portability and Accountability Act (HIPAA) prohibits medical personnel from sharing private information with others.
#8 Write your will. A will is an integral part of an estate plan because it allows you to name guardians for your minor children and to name your personal representative or executor. The executor, who should be someone you trust implicitly, will be responsible for distributing your possessions, paying any remaining bills, filing your last tax return, and closing out all your accounts.
#9 Create a revocable trust. A revocable living trust is a legal entity that holds an individual's or a family's property and other assets. Creating a trust allows you to state how you want your assets handled during your lifetime and after your death. You can name your partner as a trustee to manage and make financial decisions over your assets after your death or if you become incapacitated. The assets placed in the trust would not have to go through probate since their ownership remains unchanged after your death.
The law is definitely on the side of married couples when it comes to asset distribution. By carefully creating an estate plan, you and your partner will gain valuable peace of mind in the event something happens to either one of you. Your attorney can help you create an estate plan that is right for your situation.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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