Estate Planning – Not Just For Married Folks (Although the same message applies!)
Estate planning is often considered something you only need to worry about once you get married. But the reality is every adult, regardless of age, income level, or marital status needs to have some fundamental planning strategies in place if you want to keep the people you love out of court and out of conflict.
In fact, estate planning can be even more critical for unmarried couples. Regardless if you’ve been together for decades and act just like a married couple, you aren’t viewed as one in the eyes of the law. And in the event one of you becomes incapacitated or when one of you dies, not having any planning in place can have disastrous consequences.
If you’re in a committed relationship and have yet to get—or even have no plans to get—married, the following estate planning documents are an absolute must:
1. Wills and Trusts
If you’re unmarried and die without planning, the assets you leave behind will be distributed according to our state laws to your family members: children, parents, siblings, and possibly even other, more distant relatives if you have no living children, parents or siblings. The state’s laws would provide NO protection for your unmarried partner. Thus, if you want your partner to receive any of your assets upon your death, you need to create a will.
A will details how you want your assets distributed after you die. You identify to whom you want to leave your ‘probate’ assets. Some assets like life insurance, pensions, and 401(k)s, are usually not transferred through a will. Instead, those assets will go to the named beneficiary on those accounts. Beneficiary designations override your Will directions. Be sure to name your partner as beneficiary if you’d like him or her to inherit those assets!
There’s a Better Way
Although wills and beneficiary designations offer one way for your unmarried partner to inherit your assets, they’re not always the best option. They only apply after your death. They are not effective if you are incapacitated. In that case, your partner may not have access to needed assets to pay bills. Your partner could even be kicked out of your home by a family member appointed as your guardian during your incapacity.
Moreover, a will requires probate. Probate is a court process that can take quite some time to navigate. And finally, assets passed by beneficiary designation go outright to the beneficiary, with no protection from creditors or lawsuits. To protect those assets, you’ll need a different planning strategy.
A far better option would be to place the assets you want your partner or other beneficiary to inherit in a living trust. Trusts can be used to transfer assets in the event of your incapacity, not just upon your death. Trusts also do not have to go through probate. You can save your loved ones precious time and money with a Trust.
What’s more, leaving your assets in a continued trust for your partner or other beneficiaries can ensure that the assets are protected from creditors, future relationships, and/or unexpected lawsuits.
One Size Does Not Fit All!
Consult with us for help deciding which option—a will or trust—is best suited for passing on your assets. There is no “one-size fits all” plan.
2. Durable power of attorney:
When it comes to estate planning, most people focus only on what happens when they die. However, it’s just as important—if not more so—to plan for your potential incapacity due to an accident or illness.
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. This person could be a family member, who doesn’t care for or want to support your partner. It could also 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.
Managing Your Financial and Legal Affairs
Durable power of attorney is an estate planning tool that will give your partner immediate authority to manage your financial matters in the event of your incapacity. He or she will have 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.
Protecting Your Partner
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 week, 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 Family Wealth Planning Session.
This article is a service of Susan Hunt, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth 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 Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.