Table of Contents
- Issues to Consider in Estate Planning for Unmarried Couples
- Joint Ownership
- Having an alternate beneficiary
- Creating a Will
- Naming your Partner as a beneficiary of certain accounts
- Guardianship for children
- Medical Power of Attorney
- Cohabitation Agreement
- Make Your Partner a Designated Beneficiary of Subscribed Plans
- Bottomline
Estate Planning for unmarried couples is an essential but often overlooked issue. In the 1980s, the ratio of unmarried couples buying their first homes was less than 1%. Now this number has reached 16%. Therefore, it is essential to decide who owns the assets after the death of one Partner or both.
Not having an estate plan can lead to unwanted financial complications for your Partner and the possibility of your assets being at the court’s discretion.
Issues to Consider in Estate Planning for Unmarried Couples
- Joint Ownership
Joint Ownership is a straightforward and effective tool that can provide security and peace of mind. It means that when one owner passes away, the other automatically inherits the property without probate. Such a setting ensures a smooth transition of assets, giving you the control and peace of mind you need in your estate planning.
- Having an alternate beneficiary
Naturally, the Partners spend a lot of time together. Therefore, it is safe to have an alternate beneficiary aside from the joint tenancy agreement with rights of survivorship. This unfortunate happening is not out of the question; if one Partner has an accident, the other may accompany him and meet the same fate.
Therefore, nominating a secondary beneficiary is crucial to safeguard your property from governmental interference or from falling into unwanted hands. This proactive step can give you peace of mind that the executors dispose of your assets according to your wishes.
- Creating a Will
The rules for unmarried couples are different from those for married couples.
Therefore, if you have a Partner, you should not die intestate. Dying intestate means you did not leave a will. In this case, the law will not treat your Partner as your next of kin.
The court will not consider your Partner entitled to your inheritance.
So, remember to name your Partner as a beneficiary in your will to ensure that he is not deprived of the property you want him to get.
- Naming your Partner as a beneficiary of certain accounts
Some assets move on to the surviving spouse or Partner or any person named as a beneficiary. These include insurance money, savings accounts, etc.
Usually, the institution you are opening an account with will ask you to name a beneficiary.
If you want that receivable or asset to go to your Partner, you should name him a beneficiary so he can easily access those funds without probate. If you do not do so, it will be difficult for him to access those funds, no matter how well you have committed to it.
- Guardianship for children
It would help if you considered appointing a guardian for your children. Usually, if one of the Partners in an unmarried couple passes away, the other one will get custody of the children.
However, that will happen in the case of a natural parent. So, if your Partner is not the natural parent to the spouse, it can cause complexities.
So, make sure you appoint a guardian through a will.
- Medical Power of Attorney
A medical power of attorney is a document that authorizes a person to make decisions on your behalf regarding your medical needs when you can no longer do it for yourself.
Having a medical power of attorney nominating your Partner is essential because the court will decide who to appoint if you are incapacitated. The court will prefer someone from your family to perform this job, whereas it is a Partner who understands your needs well and understands your medical preferences.
This problem is faced by LGBTQ couples as they do not have their Partner to make decisions for them. Hence, having a medical power of attorney is essential.
- Cohabitation Agreement
A cohabitation agreement stipulates the conditions of living together. It is an essential document to make sure that you two have sorted out how your assets will be managed and distributed after one of you passes away.
- Make Your Partner a Designated Beneficiary of Subscribed Plans
Suppose you have subscribed to plans like insurance, a Registered Retirement Savings Plan, or a Registered Retirement Income Plan. In that case, they are least likely to roll over to your Partner.
It is advisable to name your Partner as beneficiaries so they can enjoy the benefits from those savings and receivables.
Bottomline
Unmarried Couples have fewer protections than married couples. However, taking the steps mentioned above can make your position much more secure and allow you to have this comfort that you and your assets will not fall into the wrong hands.