Dear Clients and Friends,
If you are in a committed relationship but are not married to your partner, estate planning is essential. Unless you each draft a will and designate the other person as a beneficiary, your assets will pass to other family members and your partner will receive nothing when you die. Further, without proper planning you won’t be able to make end-of-life decisions for each other.
In addition to a will, here are some tools available to unmarried partners:
Joint ownership: Under joint tenancy, ownership is shared equally with a right of survivorship. That means when one owner dies, the other automatically takes over the deceased person’s share. Establishing joint ownership is usually as easy as putting both names on a document, such as a vehicle title or the deed to a house.
Beneficiary designations: Certain assets can be transferred via beneficiary designations, outside of your will. You can leave bank accounts, insurance, retirement accounts, and certain government securities to someone by naming that person as the “payable-on-death” beneficiary. These forms are available directly from the bank/account administrator and can be updated at any time.
Living will and power of attorney: If you want your partner to handle financial and medical decisions if you become incapacitated, a health care power of attorney and a living will can make sure that happens. Likewise, a financial power of attorney gives your partner control over your assets.
Revocable trust: A living trust places your assets in trust for your benefit during your lifetime and designates where these assets will go when you die. A revocable trust is one you can change at any time. They can be set up to benefit unmarried partners, in the same way they can be set up for children or other heirs.
By placing assets in a trust, you can avoid the probate process, eliminating delays and fees. Your property can pass immediately and directly to the named beneficiaries. Some people also choose trusts to protect their privacy. While wills are public documents, a living trust is private and typically more difficult to challenge.
If you have questions about owning property as an unmarried couple, or ensuring your long-range intentions are protected, an estate planning attorney can help.
Preparing for an estate planning meeting
When setting up a will and other estate planning documents, many clients are concerned about making the most efficient use of their attorney’s time. While these meetings are bound to raise some questions you hadn’t thought of, there are things you can do to prepare.
The more thought you put into certain goals and wishes (including those below), the easier it is for your attorney to create a set of documents that reflects your intentions.
Executor: Think about who would serve as your executor or personal representative charged with settling your estate.
Healthcare proxy: If you become incapacitated, who do you trust to make medical decisions for you?
Financial power of attorney: Similar to the healthcare proxy, this is the person who acts as your financial agent if you become incapacitated.
Guardian for your minor children: If you have children, or are planning for children, it’s a good idea to name a guardian and a backup in case the first is unable or unwilling to serve.
Personal belongings: Consider whether there are certain items (e.g., heirlooms, cars, jewelry, or artwork) that you would like to be given to someone specific.
Distributions to young beneficiaries: Consider how beneficiaries will receive their share of your estate. If assets are passing to surviving children, do you want them to receive their share upon turning 18? Would you rather a trustee provides specified access to the funds until the child reaches a specified age?
Equalization: If you provided a substantial gift to a child in your lifetime (e.g., you helped them through college or paid for a wedding) that you have not yet provided to other children, do you want to provide an equalization mechanism as part of their inheritance distributions? If your adult children have very different financial situations, will that impact how you want your assets distributed?
Distributions to adult beneficiaries: Do you have adult heirs who might benefit from having their share better protected in case of divorce or creditor claims? Let your estate planning attorney know if any of your beneficiaries have special needs, have legal or credit problems, suffer from addiction, or seem likely to divorce in the future.
Charitable bequests: Do you wish to provide gifts to any nonprofits as part of your estate?
These are big questions and you may not have all the answers right away, but don’t let that be a reason to put off scheduling an appointment with us. We can and will provide suggestions and help you think through all of your available options.
Best,
Ron