An estate plan might not necessarily be at the top of your current priority list, especially if you and your partner are young. But regardless of whether you're in your early 20s or nearing retirement age, unmarried couples should consider putting together a few simple documents to prevent the headaches that accompany available end-of-life care and asset distribution after an untimely death.
Depending on state law, married couples have special privileges that give a spouse the right to make individual medical decisions in their partner's name after a harrowing and incapacitating event. Being married also offers substantial tax benefits both during life and death and can help ensure that a spouse receives full control over all marital assets and a portion of the decedent's personal belongings, even in the absence of a will.
Unmarried couples do not have the above privileges. If your partner dies without a will or any other form of an estate plan, nothing they own will be yours, including property you lived in together (if they were the sole owner). Without a will naming you their guardian or the necessary adoption paperwork, you cannot continue to raise your partner's children, like you have been doing together.
If your partner is incapacitated and you do not have the necessary paperwork, HIPAA dictates that you cannot make medical decisions for them or even be privy to certain information. In some states, you would be last on the list of potential proxies – in other states; you would not be on the list at all. Thankfully, these issues can be rectified without making any hefty investments in a complicated estate plan. Here are some essential estate planning documents that unmarried couples should consider.
Joint ownership can solve many problems in the asset bequeathment area, as joint ownership agreements generally allow the surviving owner to become an asset's full owner (also known as the right of survivorship). If you and your partner buy a home together, you can opt to become joint tenants, wherein you both own an equal share of the property, and the survivor gets the other half if one of you dies. Another form of joint ownership is a life tenancy.
The owner of a property can establish a life tenancy wherein one or more named life tenants have the right to occupy the property for the rest of their lifetime (while being responsible for the property's costs and management). Once they die, the property passes to a remainder owner. This way, you can ensure that if you die, your partner continues to live in the home you lived in together, but your child (or one of their descendants) is guaranteed to own it after your partner dies.
If you opt to become tenants-in-common (wherein you each possess an unequal share, based on how much you invested in the purchase, for example), you will have to attribute the right of survivorship to the deed separately. Tenancy-in-common allows a decedent's share in a property to become part of their estate, inheritable as per their will or state intestacy laws. However, there are considerable downsides to this. First, naming your partner joint tenant of a property after the fact is the same as effectively gifting 50 percent of the home's value to them.
This can incur considerable tax expenses. Secondly, if you break up, there's little recourse for the original owner to try and regain their other half without their ex's consent. Why not only name your partner in your will? Utilizing a will to pass property can significantly complicate things. Any assets or property that remain in a person's estate after they die (with or without a will) must go through the probate process before they can be bequeathed to a loved one.
However, that does not mean your partner is completely absolved of costs and complications. Unmarried couples do not share the same tax privileges as married ones, so your partner will likely have to pay an inheritance tax (depending on state laws) on any assets they jointly owned with you before your death. Whether you wish to own property together or pass it on through a will is up to you. There is also another option for most properties and assets.
Suppose you do not want to deal with the tax headache of gifting your partner property that you did not purchase together during your lifetime. In that case, you can still ensure that they own it after you die without worrying about probate by utilizing a living trust. A trust is a legal entity that can hold assets and property "in trust" for a beneficiary.
Trusts require a trustee, someone to manage and distribute the property after you die, much like the executor/representative of a will. Trusts can hold assets, properties, accounts, and more. They are incredibly flexible, but consequently, can become incredibly complicated to create and manage.
However, if your goal is to pass certain assets and property to a loved one without probate, your trust need not be overly challenging to write or execute. Certain trusts are specifically designed for married or unmarried couples leaving property and assets for one another without incurring estate taxes, for example. These are so-called AB trusts or bypass trusts.
If you have minor children, then a will can be utilized to designate a guardian for them. This can help unmarried couples ensure that the surviving partner will continue to care for their child without official adoption paperwork, establishing them as a legal parent.
Otherwise, the child's guardianship will likely become a probate court matter, open to disputes from potentially estranged family members. A well-written will can still play an essential role in an estate plan with trusts, as wills can be used to designate guardianship and ensure that certain assets and properties not named in a trust are poured over into it after death.
End-of-life care can be complicated, especially if your partner is unresponsive, incapacitated, or not mentally fit to discuss their care. That is why it is essential to discuss worries, fears, and issues before becoming a reality. A living will is an important estate planning document known as an advance directive. It acts as a set of instructions for healthcare professionals and loved ones to understand what a person forbids and allows concerning their healthcare.
For example, a living will be used to ensure that your family and partner will not resort to specific measures to keep you alive after an accident or after your illness takes a hard turn for the worse. Alternatively, if you have reservations over particular treatments, you can outline these in a living will – or give your explicit permission. On the other hand, a power of attorney is a document granting another person the right to act as your representative.
Durable powers of attorney give that person the right to decide on your behalf even when incapacitated. These documents may be written to restrict that power to medical decisions or expand them to include financial ones. Naming each other as your agents is a wise move if you want to ensure you can speak for one another if the other is incapacitated.
Working with an estate planning professional can help ensure that you and your partner can benefit wholly from the myriad of tools at your disposal to protect one another, solve potential conflicts with estranged relatives, and quell disputes before they arise.
Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.
Whether you need help creating a living trust or navigating probate, our living trust law firm's compassionate team of estate planning lawyers and probate lawyers are here to help you and ready to answer your questions.
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