Essential Estate Planning Tips for Unmarried Couples
In this article, we’ll dive into estate planning for unmarried couples. Even without the legal protection offered to married couples, unmarried partners can still safeguard their assets and ensure their wishes are followed after their passing.
Register for one of our free estate planning seminars to hear from the professional estate planners at Craig Associates, PC, or call us at (828) 258-2888 for an initial case evaluation.
The Importance of Estate Planning for Unmarried Couples
Estate planning for unmarried couples is arguably more crucial than estate planning for married couples. Unmarried couples do not have the safety net of the law that comes with marriage to assist them in the case of death or incapacity of one partner. The surviving partner could potentially face numerous challenges and the lack of legal protection could deny them access to the deceased’s property, decision-making in their medical care, or even funeral arrangements.
The welfare of children is another factor. If an unmarried couple has children, proper estate planning for unmarried couples would ensure their welfare if one or both parents dies. Otherwise, the children might be left in a legal predicament over their guardianship or inheritance.
Benefits of Estate Planning for Unmarried Couples
- Estate planning for unmarried couples allows people to direct their assets to their partner without interference from relatives.
- Estate planning for unmarried couples also provides control over medical decisions. You can appoint your partner as the health care proxy or power of attorney to make crucial decisions if you can’t do so yourself.
- Estate planning for unmarried couples can designate guardianship and dictate how their wealth will be distributed to secure their children’s future.
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“I hired Craig Associates PC after the death of a loved one made us realize how complicated that process could be. I decided Craig Associates PC was the right firm for me because of strong recommendations and great reviews as well as the comfort they installed in early conversations. What I liked most about Craig Associates PC was they made a very complex process easy and helped at every step. The outcome of this case was that I have comfort knowing my loved ones will be cared for in the way I desire. As a result of this outcome, I feel comforted knowing this process is complete and was done right by a great team.”
Jesse S. | Asheville, NC
Here are terms you may come across in estate planning for unmarried couples.
Retirement: Planning for the distribution of retirement or social security assets, which can be more complex for unmarried legally sound estate planning for unmarried couples.
Cohabitation Agreement: Legal agreements detailing financial responsibilities and property rights for unmarried couples living together.
Common Law Marriage: A legal recognition of a relationship without formal marriage, influencing estate planning for unmarried couples in some jurisdictions.
Revocable Living Trust: A tool often used in estate planning for unmarried couples to control asset distribution.
Legal Parent: Issues around parental rights and guardianship may arise in estate planning for unmarried couples with children.
Domestic Partners: Refers to unmarried couples, sometimes same-sex couples, in a committed relationship, with specific legal rights and estate planning needs.
Medicaid: Planning for potential long-term care needs and eligibility, relevant for estate planning for unmarried couples.
Common Law: Refers to unwritten legal principles that may impact estate planning for unmarried couples.
Common Law Spouse: An informal spouse-like relationship recognized in some jurisdictions.
Gift Tax: Tax implications for gifts between unmarried couples may differ from those between spouses.
Immediate Annuities: Financial products that can be used in retirement and estate planning for unmarried couples.
Conservator: A personal representative appointed to manage the finances of someone unable to do so; relevant in estate planning.
Federal Estate Taxes: Estate tax on inheritance and estate transfers, with unique rules for unmarried couples.
Right of Survivorship: A property ownership right that automatically transfers property to a survivor, relevant in estate planning for unmarried couples.
GST Tax: Generation-Skipping Transfer Tax; relevant in complex estate planning scenarios, potentially affecting unmarried couples.
Will Contests: Legal challenges to the validity of a will, a concern in estate planning for unmarried couples.
Types of Estate Planning Tools in Estate Planning for Unmarried Couples
With our expertise in the complexity of estate planning at Craig Associates PC, we can help you navigate this process and establish which of these tools will best suit your estate planning needs:
Trusts
A trust is a legal entity that safeguards assets. There are many types of trusts (living trust or revocable trust, irrevocable trust) and they can help avoid probate, reduce taxes, and provide for loved ones in specific ways. A trust comes into play when a person (trustor) entrusts their property to a second party (trustee), who then manages and distributes the assets to a third party (beneficiaries).
Wills
A will is a legal document where a person, the testator, specifies how they want their property distributed after their death and whom they want to execute their estate. It’s crucial for estate planning for unmarried couples because without a will, the state laws of intestacy will dictate who gets what in an estate. A will can also include who the guardian should be for any minor children and can outline final wishes and funeral arrangements.
Powers of Attorney (POAs)
A power of attorney (POA), also called a durable power of attorney (DPOA), allows a person (the principal) to appoint someone else (the agent or attorney-in-fact) to manage their property, financial, or medical affairs if they are unable to do so. The power can be broad or narrow, temporary or permanent and must be created while the principal still has the mental capacity to make legal decisions.
Health Care Directives
A health care directive, also known as an advance directive, is a legal document commonly used in estate planning for unmarried couples to specify healthcare wishes if they are no longer able to make decisions due to illness or incapacity—typically a trusted family member or friend is appointed to make medical decisions on your behalf.
Joint Ownership
Joint ownership is where two or more individuals hold ownership rights to a particular asset or property. This type of ownership is commonly used in estate planning for unmarried couples and there are two forms of joint ownership: Joint tenancy and tenancy in common. An estate planning lawyer can help you decide if a joint tenant or tenants-in-common type of ownership is right for your unique circumstances.
Role of Professional Advisors in Estate Planning for Unmarried Couples
While many people might think that estate planning for unmarried couples is a task they can handle themselves, it’s crucial to involve professional advisors, such as estate lawyers, financial advisors, or tax professionals and accountants. These experts with specialized knowledge in different fields related to estate planning can ensure that your plan is both thorough and legal.
Working with Estate Lawyers
Estate lawyers are an essential part of estate planning for unmarried couples. They provide useful legal advice to ensure the legality and effectiveness of your plan and understand the state laws to guide you accordingly. They also help you draft important documents to help avoid potential legal issues that could arise after your death and help keep your documents updated to accurately reflect your wishes and your circumstances. Furthermore, they advise on beneficiary designations and whether certain assets should be placed in a trust, sold, or divided differently to fulfill your wishes.
Estate Planning for Unmarried Couples FAQs
Can an unmarried partner inherit assets without an estate plan?
Without estate planning for unmarried couples, an unmarried partner may not be legally entitled to the deceased’s assets. Assets are typically distributed among surviving family members unless previously specified and are subject to state laws.
What is a healthcare proxy and why is it significant for unmarried couples?
Estate planning for unmarried couples uses healthcare proxies to appoint someone to make medical decisions for someone else in case of incapacity. Unmarried couples may not have legal standing to make medical decisions for each other without this document.
Can a living will ensure that a partner’s wishes are upheld?
Yes, a living will expresses an individual’s desires for medical treatment if they are unable to communicate. This guarantees that partners understand and respect each other’s wishes in dire circumstances.
How can unregistered assets be transferred to partners upon death?
Estate planning for unmarried couples might incorporate a transfer-on-death form, pay-on-death bank accounts, or life insurance policies, where the partner is named as the beneficiary, to transfer unregistered assets.
Learn More About Estate Planning for Unmarried Couples
The legal landscape presents numerous challenges in estate planning for unmarried couples, but our professional estate planners are here to help you every step of the way. Call Craig Associates, PC at (828) 258-2888, contact us using the form below, or get a headstart by registering for one of our free estate planning seminars to learn more about estate planning for unmarried couples today!
