Estate planning is important for everyone, but it has some differences for unmarried couples. Unmarried couples must take extra steps to protect each other because marriage comes with automatic legal rights. This blog post will explain how estate planning works differently for unmarried couples.
Why planning matters
When a married person dies, their spouse often inherits their property automatically. However, if one partner in an unmarried couple dies without a will, state law decides who gets the property, which could mean the surviving partner receives nothing. Therefore, unmarried couples must create legal documents to ensure their wishes are followed.
Key documents
Unmarried couples should consider a Durable Power of Attorney for finances and a Healthcare Power of Attorney (also sometimes called an Advance Healthcare Directive) to ensure their partner can make decisions if they become incapacitated. A will is a legal paper that says who should receive property after someone dies. A power of attorney lets one partner make financial decisions if the other partner cannot. A healthcare directive allows a partner to make medical choices if the other partner is unable to communicate. These documents are very important for unmarried couples.
Property ownership
How a couple owns property matters. Married couples often own property as “joint tenants with rights of survivorship.” This means that if one spouse dies, the other spouse automatically owns the whole property. Unmarried couples can also own property this way. Alternatively, they can own it as “tenants in common.” With this option, each person owns a share, and that share can go to someone else, as stated in a will.
Beneficiary designations
Many assets, like retirement accounts and life insurance policies, pass directly to beneficiaries. A beneficiary is a person named to receive these assets. Both married and unmarried couples can name anyone they want as a beneficiary. Unmarried couples should make sure to name their partner if they want them to receive these assets.
Unmarried couples need to create careful estate plans to protect themselves and their partners because they do not have the same automatic rights as married couples. These plans should include wills, powers of attorney, and healthcare directives. Unmarried couples should also ensure they have clear beneficiary designations for assets that pass outside of a will, such as life insurance and retirement accounts.
