How Estate Planning for Unmarried Couples Works

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Do you want to plan for the future as a couple? The Law Office of Paul Black offers counsel in estate planning for unmarried couples. Call us for more info.

Author: Paul Black

Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as  a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: June 14, 2023.

Estate Planning for Unmarried Couples

Estate Planning for Unmarried Couples sec

It’s never too early to start planning for your family’s future.

If you have questions, I’m here to help. There is no commitment and we provide free initial 15-minute phone calls. We look forward to meeting you.

There is a general misconception that estate planning is only for wealthy people and families. In reality, unmarried couples may benefit more from estate planning. Without an estate plan, unmarried partners cannot make end-of-life decisions. Also, in the case of death, the surviving partner may be unable to inherit from the deceased.

According to the U.S. Census Bureau, the number of unmarried partners in the U.S. has tripled in the last 20 years. With over 17 million unmarried couples in the U.S. today, there is a need to talk about estate planning.

What Is an Estate Plan?

A comprehensive estate plan is a collection of legal documents. These estate plan documents could include

  • A will
  • A durable power of attorney for financial affairs
  • Health care proxy and health care directive

Estate planning documents are usually prepared to safeguard you and your assets if disability or death occurs.

The law also provides certain protections to unmarried partners if one becomes incapacitated or dies. This guide is an overview of estate planning for unmarried partners.

Unmarried Couples Property Rights

Regarding property rights, unmarried couples do not have similar legal rights to married couples. Unmarried couples’ property rights can vary depending on the nature of their relationship. Also, state laws vary.

Joint ownership is when a property is held in the name of both parties. For such joint property, both you and your partner are joint tenants in the property. So, one partner becomes the sole owner after the other partner’s death.

However, this is provided the surviving joint tenant has a right of survivorship. If there is a right of survivorship, the partner becomes the sole owner even without a will or revocable trust.

Alternatively, you can title your property as tenants in common. This way, you can leave your property to someone else after death. In this case, the property will be shared in your will. So, your property can go to anyone instead of the joint tenant.

This area of estate planning may require you to consult with a Top Estate Planning Attorney.

Why Is Estate Planning Especially Important for Unmarried Couples?

For several reasons, attorneys encourage unmarried couples to engage in estate planning.

Asset Protection

An estate plan can assist unmarried couples in protecting their assets in the event of mortality or incapacity. If you don’t have a trust or will, the laws of intestacy will provide the distribution of your property. 

Unmarried couples are considered legal strangers in the event of intestacy. Therefore, unmarried couples have no privileges under the laws of intestate succession.

Medical Care

In the event of a medical emergency, estate planning can help ensure that a non-married companion’s wishes are honored.

If incapacity occurs, your health care directive allows one spouse to make medical decisions on behalf of the other. If you do not have this, healthcare providers may consult your family members.

Avoiding Probate

Probate is a time-consuming and expensive legal procedure of transferring assets to beneficiaries. Unmarried couples can avoid probate through the use of a revocable living trust. That transfers assets directly to named beneficiaries.

Tax Planning Considerations for Unmarried Couples

The unlimited marital deduction allows a US citizen surviving spouse to inherit assets without estate taxes. But, unmarried couples in domestic partnerships do not have such benefits. 

However, unmarried couples can still use some strategies to reduce the amount of estate tax after the death of their partner.

These strategies may include

  • Traditional lifetime gifting options

  • Beneficiary designations for life insurance

  • Formation of business entities

The formation of business entities can help mitigate tax liability on the transfer of assets to the other partner. You may want to check these estate planning resources for more information.

Inherited Property and Benefits for Unmarried Couples

Federal estate taxes may apply if you inherit assets from a non-married partner. You may also pay state-imposed estate taxes in some states, like New York, Connecticut, and Massachusetts.

The federal estate tax exemption per person is released annually by the IRS. It might attract federal estate tax if it exceeds the federal estate exemption amount. The only way around is to use estate planning tools, such as the following:

Life Insurance

You could purchase life insurance that would be owned within an irrevocable life insurance trust. The insurance would be included in the amount of the estate tax due. That would replace the tax that the estate would pay.

Gifting

Unmarried couples can give their partner up to $12.06 million as nontaxable gifts in a lifetime. However, gifting more than the lifetime gift tax exemption may also generate issues for unmarried couples.

Beneficiary Designations

Beneficiary designations supersede your will for retirement accounts. Suppose you designated family members as beneficiaries of your retirement account. Then, you must update your beneficiary if you want the asset to go to your partner.

Common Law Marriage

The National Conference of State Legislatures (N.C.S.L.) monitors common law legislation. According to the N.C.S.L., common law marriage regulations differ from state to state. However, many states recognize the validity of a common-law marriage.

A common law marriage regards cohabitation as if it were a marriage. The survivor is eligible for the estate and gift tax exemptions. Common law marriage is when a couple’s relationship satisfies specific state law requirements.

Generally speaking, common law marriages are permissible when:

  • Couples have cohabitated for a certain period

  • Both participants in the relationship meet the legal requirements for marriage

  • Both parties desire marriage

  • The nature of the couple’s relationship is public knowledge

Wills for Unmarried Couples

Your Georgia will & testament specifies who will inherit your property upon passing. Wills are very significant for unmarried couples for two reasons.

First, it is crucial if you have minor children. It allows you to name their legal parents if you cannot fulfill parental responsibilities. 

Second, it allows you to choose a personal representative (an executor or executrix). This person will perform the following after your passing:

  • Manage your estate

  • Manage the distribution of your belongings

  • Ensure payment of your final expenses

  • File for your final tax return

  • Close your accounts.

 

What Happens if an Unmarried Partner Dies Without a Will?

 

If a companion in an unmarried relationship dies without a will, the deceased’s assets pass to their family. If you die without preparing a will, your estate assets are subject to intestacy laws. Almost always, intestacy laws direct the court to distribute the property based on familial ties. If this happens, the surviving partner may get nothing.

Besides, even if you have documents, not being married can raise a more significant potential for litigation. There might be issues surrounding the distribution of your estate assets.

Therefore, it’s essential for unmarried partners to think through and create an estate plan now. If you are ready to make future plans as an unmarried couple, we can help. The Law Office of Paul Black advises unmarried couples on estate planning. Call for more information.

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