Unmarried? You Are Not Alone, But You Still Need a Plan

If you are among the millions of Americans in a committed long-term relationship who have decided to put off—or forego altogether—marriage, estate planning takes on a heightened importance for you. The law continues to confer certain benefits and rights on the legally married that simply don’t exist outside the bounds of marriage. Fortunately, careful estate planning can accomplish what the law does not. While much of the discussion involving estate planning focuses on married couples, this topic is just as important for a single person. In fact, many times it is even more important that a single person have a well-coordinated estate plan. This is because the default laws governing estates often work poorly for people without a spouse and may not adequately provide for a significant other or unmarried partner. Having a cohesive and well-drafted estate plan will ensure that you protect and provide for those you truly care about upon your death.

The laws do not keep pace with societal norms

Not all that long ago, it was almost unheard of for two unmarried people of the opposite sex to live together. In fact, figures released by the U.S. Census tell us that in 1968 only 0.1 percent of 18- to 24-year-olds and 0.2 percent of 25- to 34-year-olds lived with an unmarried partner. Fast forward 50 years, and now 10 percent of 18- to 24-year-olds and 15 percent of 25- to 34-year-olds live with an unmarried partner. The law often does not keep pace with societal norms, which is why it is important to have comprehensive estate plan if you are in this type of relationship.

Evolving estate planning

It is important to understand that your estate plan can change over time. You may eventually experience life changes like getting married, having children, or buying your first home that will necessitate changes to your estate plan. Although life is constantly changing, it is best to get in the driver’s seat early when it comes to estate planning. If you die without a will -- referred to as intestate -- all of your possessions will be distributed according to the default laws of your state. While most state laws have a married person’s assets go to their surviving spouse and children, the same is not true for unmarried individuals. Generally, state law provides that a single person’s assets are passed on to their next of kin. This includes children, parents, and siblings. Noticeably absent for many unmarried people are provisions providing for a long-term boyfriend or girlfriend. And, if there are no surviving close relatives, the assets will likely go to the state. To avoid the state dictating what happens to your assets, it is vital that you have a properly drafted estate plan put together.

As an Unmarried Person, How You Own Things Is Very Important

There is an increasing number of couples that are not getting married, and other individuals who are deciding to remain single. For this group, estate planning is important because taxes and other financial benefits tend to favor those who have tied the knot. It also brings up the need to be very careful about how assets are titled. How your assets are titled and how the beneficiary designations are prepared will impact how your assets will be distributed upon your passing. The most common ways to hold title to property is tenants in common (TIC) and joint tenants with rights of survivorship (JTWROS). Property that is held as TIC means that each owner owns an interest in the property.  At the death of one owner, that interest is transferred according to his or her estate plan, or intestate succession if there is no estate planning. This is not an ideal way for unmarried couples to own property because at the death of one of them, the other person will end up as joint owner with the deceased’s next of kin.  JTWROS is one option for unmarried couples because when one owner dies, the property automatically transfers to the surviving owner. There are several other planning strategies that can be beneficial for unmarried individuals -- involving tax benefits, retirement plans, wills and trusts, and healthcare powers of attorney -- if the right estate plan is carefully crafted.

How Can Estate Planning Help Unmarried Couples?

Having a comprehensive estate plan in place protects you and your partner in several important ways.

Making sure your partner inherits from your estate – if you were to die without at least a basic Last Will and Testament in place, you would leave behind an intestate estate. When that happens, the state intestate succession laws determine what happens to your estate assets. Although state intestate succession laws can vary somewhat, they all distribute an estate to a spouse and/or close relatives only. Because you are not legally married, your partner would receive nothing from your estate – no matter how long you have been together. He/she would not even be entitled to sentimental personal property that you would undoubtedly want him/her to have. Executing a Will, however, allows you to gift any – or all – of your assets to your partner. Giving your partner authority over you and your assets – if you were to become incapacitated tomorrow, someone would have to take over control of your assets and make certain decisions for you. You might want that person to be your partner; however, the law would not favor appointing him/her should it become necessary for a judge to decide. Creating a power of attorney appointing your partner as agent in the event of your incapacity allows your partner to handle your finances and speak with  government agencies or other organizations, such as your credit card company or the HR department at work. Creating a revocable living trust that appoints you as the Trustee and your partner as the successor Trustee in the event of your incapacity or death can also help resolve this dilemma. Major assets are transferred into the trust and if you become incapacitated, your partner takes over as the Trustee, giving him/her control over those assets without the need to seek judicial approval. There may also come a time when you are unable to make your own medical decisions. Someone might even have to make life-sustaining, or life-ending, medical decisions for you. If you want your partner to make those decisions, you need to execute the appropriate advance directive because if a judge is forced to decide who will be your health care agent your partner will not likely be appointed. Putting your partner in charge to honor your wishes – like many people, you may have very strong feelings about how your body is handled following your death and about your own funeral and burial. You, however, won’t be around to ensure that your own wishes are honored. Someone else will decide what happens. Once again, if there is a dispute as to who is in charge, a court will likely appoint a close family member instead of your partner because you were not legally married. Incorporating a funeral and burial component into your estate plan can resolve this potential disaster by allowing you to put your partner in charge. You may also have strong feelings on how and to whom you want your assets distributed at death. A Will or Trust allows you to designate the person you want to make sure your wishes are carried out. Without a Will or Trust, a probate court judge would designate the person to carry out your wishes.

Speak to a board-certified estate  planning attorney If you do not have an estate plan yet, you should contact us today. Whether you are married, single, or cohabiting with a partner, these professionals can help you craft a comprehensive financial plan that is tailored to your personal situation and assists you in protecting those you care for the most. Give us a call today.