Unmarried couples living together, building lives together and even having families together is no longer unusual in the United States – it’s almost the norm.
Roughly 7% of the adult population in this country is living with their unmarried partners, and 59% of all adults between 18 and 44 years of age have – at some time – lived with an unmarried partner. Estate planning is essential for unmarried couples because they do not have the same legal protections as married couples.
What kinds of estate plans do unmarried couples need?
Estate planning for unmarried couples is very similar to estate planning for married couples, and should include:
- Wills: Without a will, the state’s intestacy laws may dictate who inherits the assets, which will leave the surviving partner with nothing.
- Joint ownership: Holding bank accounts, real estate and investments jointly, can ensure that the surviving partner automatically inherits those assets without going through probate.
- Beneficiary designations: Naming each other as beneficiaries on retirement accounts, life insurance policies and other financial accounts can ensure that the surviving partner receives those assets directly.
- Power of attorney: Granting each other durable power of attorney allows partners to make financial and medical decisions on each other’s behalf if one becomes incapacitated – rather than putting that power in the hands of other relatives.
- Health care directives: Creating advanced healthcare directives, such as a health care power of attorney and living will, allows partners to specify their medical preferences and appoint each other to make medical decisions in emergencies.
- Trusts: Establishing a trust can give unmarried couples more control over how their assets are distributed (and offer privacy and flexibility).
- Guardianship for children: If the couple has children, it’s essential to designate guardianship in case both partners pass away. Otherwise, the children can be trapped in family disputes that end up going to litigation.
- Tax planning: Unmarried couples may face significant tax implications upon inheritance when their partner dies. Estate planning can help minimize these tax burdens through various strategies.
If you and your partner are unmarried but cohabitating, find out what it takes to fully protect each other’s future through careful estate planning.
