Whether you’re living together, in a long-term relationship, or planning a future together, everyone needs an estate plan. Estate planning for unmarried couples is particularly important as their legal and financial situation differs significantly from married couples. In fact, unmarried couples face many challenges their married counterparts do not. For example:
- Unmarried couples have no right to their partner’s assets in the event of death
- If an unmarried couple separates without an agreement, then the division of assets and property is decided by probate court
- Health care and end-of-life decisions are made by the next of kin, which is usually not the unmarried partner
- If an unmarried partner inherits an Individual Retirement Account (IRA), they may face stricter requirements on when they can withdraw funds
- Unmarried partners cannot receive spousal Social Security, survivor, or income tax benefits
- “Common law marriages” are not recognized in many jurisdictions and therefore are not legally protected
Fortunately, there are many steps unmarried couples can take to protect their rights and ensure their wishes are followed. This article will focus on these specific considerations and how, with the help of trusted estate planning attorneys, it is possible for couples to build a successful retirement and estate plan while unmarried.
Our Philosophy
Our Philosophy
Estate planning goes beyond money, and includes intellectual, spiritual and human wealth.
Where to Start
Today, more couples are choosing to live together and even have children without tying the knot. But while unmarried couples may view each other as equivalent to spouses, the challenges they face stem primarily from legal differences between being married and unmarried. Regardless, there are ways unmarried couples can overcome these challenges.
- Federal Estate Tax and Marital Deduction: The unlimited marital deduction is a privilege only available to married couples. Unmarried partners are not eligible for this, potentially leading to a higher estate tax on the death of the first partner. But couples can purchase life insurance on each person, with the proceeds intended to cover any estate tax liabilities.
- Legal Powers and Documents: Unmarried couples can name each other as beneficiaries and executors in wills, trusts and powers of attorney, and specify the powers and authority they grant each other. This ensures that their wishes are followed, which is particularly important in states where family members are considered the primary beneficiaries.
- Communication with Family: For extra protection regarding issues of legal power and estates, unmarried couples can write a letter to family members explaining their estate plans. This letter should outline their arrangements and request that their wishes be respected.
- Living-Together Agreements: In the absence of a marriage contract, couples can establish a live-together or prenuptial agreement. These agreements, enforceable as contracts, can cover property ownership, division of assets in case of a breakup and support obligations.
- Planning for Incapacity or Death: For protection in the event of incapacity or death, couples can appoint each other as representatives in their living trusts. With living trusts they can retain control over their joint estate and dictate property distribution upon death, thus avoiding probate.
- Insurance and Health Coverage: Each partner should carry disability income and health insurance. This provides a safety net for various scenarios including disability or unemployment.
By addressing these areas — estate taxes, legal documentation, communication with family, contractual agreements, planning for incapacity or death, and insurance coverage — unmarried couples can create comprehensive estate planning that respects their relationship and protects their interests.
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The Responsible Decision
Over the past thirty years the way Americans view marriage and living arrangements has changed significantly. In fact, the number of married adults aged 25 to 54 dropped from 67% in 1990 to 53% in 2019; while the percentage of unmarried couples more than doubled. And as of 2019, the US Census estimated over 17 million unmarried partners live together in the United States.
As Americans rethink marriage and living together, more couples will need estate planning services that support their lifestyle. That’s why the San Diego, California estate planning law firm of Hatley Law Group APC specializes in estate planning with a focus on asset protection. Since 1996, we have provided clients with a holistic approach to family wealth planning, going beyond traditional financial wealth management. Our team of experienced asset protection attorneys are dedicated to helping clients safeguard their hard-earned assets and plan for their future financial well-being.
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