Estate Planning is Critical for Unmarried Couples
We live in a wonderful country with freedoms many people around the world only dream about. When it comes to relationships, we are free to marry, divorce, live together and walk away if we want to. And, the fact that 7.6 million unmarried couples live happily together in this country (2015) is proof that people enjoy these freedoms.
But, if you and your partner are not married you need to be fully aware of certain legal protections that come only with a marriage license and how basic estate planning can protect both of you.
MAKING DECISIONS IN A CRISIS
You may not realize this, because you don’t have a legal relationship you don’t have the authority to make medical, financial or legal decisions for each other in a medical crisis. This is why creating a comprehensive estate plan with a qualified estate planning attorney is vitally important.
Three documents — will, power of attorney and health-care power of attorney – can save unmarried couples heart ache and stress in a crisis. The first two are important at a time when you may become incapacitated by an injury or illness and can’t speak for yourself.
• A Durable Power of Attorney for Asset Management lets you give a person you trust full or limited legal authority to make financial decisions for you if you are incapacitated. The authority ends when you recover or die.
• A Health Care Power of Attorney gives someone you select the authority to make health-care decisions for you when you are unable to make them for yourself. This is often called a Living Will or Advance Health-Care Directive. If you do not designate your partner, he/she might have to go to court to make sure your wishes are carried out which can be time consuming and expensive and might be unsuccessful if there is bad blood between your partner and your relatives.
• A will names the individuals and organizations who are to receive your property and possessions when you die. Without a will, the law gives your property to your children, parents or siblings, not your unmarried partner. So, your partner’s siblings might inherit the home you have shared if the home is in your partner’s name. A will could give your surviving partner the right to live in your home, at least for a period of time.
OTHER IMPORTANT DECISIONS
When you are living together but not married, you need to be cautious about gifts you give each other. Married couples can give each other gifts including money in any amount. However, unmarried couples must pay close attention to the tax laws which limit gifts to $15,000 per person per year. A gift that is more than that amount, could create tax problems for you.
If you have retirement benefits and life insurance, through work for example, those benefits are passed by beneficiary designation rather than by your will. So, if you want your partner to inherit these assets, make sure your beneficiary designations are current and executed properly.
TAKE CARE OF YOUR CHILDREN
Married couples are automatically the lawful parents of their kids, but with children born to unmarried couples there’s no “presumption of paternity.” In other words, a dad needs to take legal steps to be recognized as the rightful father. Having a court-approved parenting agreement establishes legal guardianship of your children and will ensure that your children together have the same rights as children born to married couples such as Social Security survivorship benefits. If the mother dies without a guardianship agreement, the courts will appoint a guardian for your children and that may not the children’s dad.
Unmarried seniors can use a revocable living trust to make sure living parent(s) as well as children from previous relationships will be taken care when they die. A trust can be structured to allow your unmarried partner to continue to live in your house while still ensuring that the first to die’s wishes are met regarding distribution of assets to children or other dependents.
Living together or owning property with your significant other can be an incredible thing. But it’s important to be smart about what can go wrong. By getting the right legal documents in place now you can protect yourself, your finances, your property and all of your loved ones.