Most couples think that you only need to worry about estate planning AFTER you’re married. But the truth is that every adult, regardless of age, income level, or marital status, needs to have some fundamental planning strategies in place. That’s because you want to keep your loved ones out of court and out of conflict when something happens to you.
Estate planning is critical for unmarried couples who have been together for a long time. Without proper planning in place, if one of you becomes incapacitated or dies, there can disastrous consequences.
So if you’re in a committed relationship and aren’t married yet, you need these estate planning documents. If you’re unmarried and die without planning, the state’s intestacy laws control who gets to inherit. Your partner could get NOTHING. That’s because the state’s intestacy laws could leave all of your property to people in your family, such as parents, siblings, and possibly even other, more distant relatives. So at the very least you need to create a will if you want your partner to receive any of your assets after your death.
#1 You need a Will.
A will tells the world who should receive your assets after your death. But a will doesn’t cover all of your assets. (You can’t transfer certain assets like life insurance, pensions, and 401(k)s through a will. That’s because with assets like that, you use a beneficiary designation on a form.) If you die without a Will, your partner could inherit NOTHING. That’s because the state’s intestacy laws leave your unmarried partner out. Instead of your partner inheriting your money and property, it could be your family members. That’s a disaster if you don’t want that to happen.
#2 Consider a Living Trust.
Although you can use wills and beneficiary designations to leave your assets to your partner, they’re not always the best and only option for you. First, a will only goes into effect after your death and then when your will gets filed with the Court. So a will won’t work if you just become incapacitated, but don’t die. If that happens, then your partner may not have access to funds he or she needs to pay bills. And also, if one of your family members is appointed your guardian, that guardian could potentially kick your partner out of your home. Second, if you rely on beneficiary designations or pay on death accounts to give your partner your money, your partner inherits without any protections from creditors or lawsuits.
A living trust can be a game changer for you and your partner. First off, you can use a trust to provide immediate access to money for your partner if you become incapacitated. That way your partner could pay bills and have money to live on. After your death, living trusts don’t have to go through probate. Without having to go to court, your partner will save precious time and money. And if you leave your assets in continued trust for your partner, you can protect those assets from creditors, future relationships, and/or unexpected lawsuits. Consult with a qualified estate planning lawyer to help you decide whether a living trust makes sense for your situation.
#3 Durable Power of Attorney
So when people think about estate planning, most people only focus on death. But what if you become so sick that you can’t take care of yourself?
If you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. And this person could be a family member, who doesn’t care for or want to support your partner, or it could be a professional guardian who will charge hefty fees, possibly draining your estate.
Since it’s unlikely that your unmarried partner will be the court’s first choice, if you want your partner (or even a friend) to manage your finances in the event you become incapacitated, you would grant your partner (or friend) a durable power of attorney.
Durable power of attorney is an estate planning tool that can give your partner immediate authority to manage your financial matters if you become to sick to manage your finances yourself. You can give your partner a broad range of powers to handle things like paying your bills and taxes, running your business, collecting government benefits, selling your home, as well as managing your banking and investment accounts.
Granting a durable power of attorney to your partner is especially important if you live together, because without it, the person who is named by the court could legally force your partner out with little to no notice, leaving your partner homeless.
Next time, we’ll continue with part two in this series on must-have estate planning strategies for unmarried couples.
As your Personal Family Lawyer®, we can guide you to make informed, educated, and empowered choices to protect yourself and the ones you love most. Contact us today to get started with a Planning Session.
This article is a service of Myrna Serrano Setty, your family’s lawyer for life. Our firm doesn’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Planning Session and mention this article to find out how to get this $500 session for free.