Unmarried couples often face challenges when planning their estates. Without the legal benefits of marriage, partners need to take steps to ensure that others respect their wishes. Effective estate planning helps protect each partner and their assets.
Beneficiary designations
Unmarried couples should carefully select beneficiaries for life insurance policies, retirement accounts, and other assets. Unlike married couples, the law does not automatically favor a partner, so proper documentation ensures that assets go to the intended person.
Wills and trusts
Unmarried couples need to create a will to protect their assets. Without a will, the state distributes assets to biological relatives instead of a partner. A trust can also add security, allowing for asset distribution based on the partner’s needs and avoiding potential probate issues.
Health care directives
Unmarried couples need health care directives to ensure that each partner has the authority to make medical decisions. These documents allow partners to act as healthcare proxies, giving them the ability to make decisions if one partner becomes incapacitated.
Durable power of attorney
A durable power of attorney lets an unmarried partner manage financial matters if the other partner cannot do so. Without this document, the court could appoint a guardian, which might exclude the partner from having control over financial decisions.
Estate tax considerations
Unmarried couples do not receive the same estate tax exemptions available to married couples. Planning should focus on minimizing estate taxes through the strategic use of trusts, gifts, or other financial arrangements to help preserve assets for the surviving partner.
Property ownership
Owning property jointly can complicate matters for unmarried couples. Structuring ownership properly helps protect both parties. Holding property as joint tenants with rights of survivorship ensures that ownership transfers directly to the surviving partner, preventing disputes with other family members.
Estate planning can feel overwhelming, but taking the right steps now will protect both partners in the future. Unmarried couples need to act proactively to create legal documents that secure their rights and ensure that others honor their wishes.
