‘Til Death Do Us Part – Estate Planning Tips for Commitment Without Marriage

Content provided by WealthCounsel; reviewed and edited by Beth Ann R. Lawson, Esq.

Advice columnist Ann Landers once observed that “love is friendship that has caught fire.” For many Americans, such feelings are not being formalized by marriage. This growing group of committed partners includes all ages with many seniors now expanding the numbers.

 

  • Per the U.S. Census Bureau, approximately 112 million people in the U.S. are unmarried;
  • 45 percent of our country’s households are “unmarried households.”
  • In 2013, the CDC found that “cohabitation [without marriage] is now a regular part of family life in the U.S.”

The law has not kept up with these societal trends. If you and your significant other love each other but do not want to tie the knot, you need an estate plan that provides for each partner’s specific needs which protect both the partner along and any other loved ones you wish to protect. When the cost of long term care enters a family’s life, then marriage is a true legal tie that binds the two incomes and assets to the cost of the long term care for one or both.  For many seniors, paying long term care for a second spouse at the risk of leaving nothing to their own family is too big a price to pay.

Estate planning for married couples can seem pretty straightforward because there are long-standing legal and tax strategies. Unmarried couples may need to take a more individualized approach in order to achieve both their mutual and separate goals. Following are some documents and methods to consider when creating or updating estate plans for those who are legally single and committed to another person.

Living Trusts

Living trusts allow you to use your assets while you are alive. After you pass away, the trust can bypass the court probate process when transferring property to loved ones. A trust can keep your affairs out of public record. It can empower someone else to handle your finances if you become unable to do so. Trusts tend to cost more up-front than some other solutions, but the life, incapacity and death benefits they provide cannot be easily or reliably replicated with other planning options. A trust is very often the superior estate planning tool and a cornerstone of most comprehensive plans, especially for couples who have not formalized their relationships with a legal marriage but intend to remain committed to the other.

Wills

A pour-over will can be an effective “backup” and compliment to a revocable trust. When you pass away, your assets get “poured-over” into your trust.  Assets are then distributed to your beneficiaries per the terms and within the protections of that trust. The pour-over will keeps things simple, making the process less stressful (and prone to error) for your executor and trustee. It also helps wrap up loose ends, in case some assets were not transferred to your trust before you passed away.

What happens if you die without a will or other estate plan? Courts refer to this as “dying intestate.” It means that the rules that will apply to your estate distribution are generic state laws. These laws rarely, if ever, account for long-term unmarried partners, so a will is essential to protect a person to whom you are committed. As an unmarried couple, you simply cannot rely on the intestate laws to work for you.

Beneficiary Designations

Most retirement accounts and many other types of accounts allow you to designate a “beneficiary,” or a person who will automatically receive what’s in the account when you die. Make sure you update your beneficiaries on your 401(k), IRA, or other retirement accounts, as well as on life insurance and other documents. Depending on how your trust is designed, your circumstances and your goals, you may name one or more trusts as the beneficiary rather than an individual person.

Legal/Financial Power of Attorney, Advance Medical Directive, and Similar Documents

These documents allow you to designate your significant other as the person who has the right to make certain types of decisions and sign documents on your behalf in different legal situations if you become incapacitated. If no such power exists, the decision-making task typically passes to a close blood relative and typically requires a court proceeding called a guardianship or conservatorship. Your lawyer can help you determine which powers should be covered by these different documents to ensure that enough authority is granted while still providing protection against unauthorized actions.

Whether you are 30 years of age or 90 years of age, if you have been living as a committed couple for years, or are eyeing retirement options, or just beginning a family with a person who has not been legally recognized as your spouse, you probably have questions, and you should.  How should you protect yourself and family financially as you and your partner age? What can you do to enshrine the values you hold dear for the next generation? What if an unwanted event happens, throwing you and your partner off balance — what contingency plans are in place?

Our experienced estate planning attorneys can help you identify a strategy create the peace of mind which you, your partner and your separate families need. Please call or email us to schedule a private consultation.