Are you in a relationship, but not married? More and more people are getting married later in life or never getting married at all. However, there are significant issues you may face if you do not create an estate plan with your significant other.
Let’s use a hypothetical couple: Sue and Pat.
Create a Will or a Trust:
They have been together for ten years and living together for five, with no plans to get married. Together, Sue and Pat have accumulated property (cars and personal property) along with some debts (credit cards and car payments). Everything is going great, and then their world is turned upside down. Pat passes away due to a sudden illness. Sue just lost a loved one and is now going to lose her home as well because Pat owned the condo in his name. Sue is not entitled to inherit anything from Pat because they did not create an estate plan while he was alive.
If they had married, Sue would inherit almost everything that Pat had owned during the time of his death. However, without an estate plan, Sue has no legal right to inherit from Pat.
Creating an estate plan is the only way to make sure your unmarried partner can inherit assets from you. Otherwise, your biological relatives will be the ones receiving your assets. Meaning your partner has no home, no access to finances, or is now facing the burden of debts accrued together.
If you and your partner want to avoid this situation, you must create an estate plan. A will might be the best option but make sure to speak with an estate planning attorney to determine the best option for you and your partner.
Create a medical and financial power of attorney documents:
Let’s take a look at Sue and Pat again, but this time, instead of dying from his illness, Pat is now in a persistent vegetative state. Pat and Sue were very open about their end-of-life choices, and Pat did not want to exist in this state.
Since Pat and Sue never created a Medical Durable Power of Attorney document or Healthcare Directive, Sue does not have the legal authority to make decisions for Pat. It is now up to Pat’s parents, who have refused to take Pat off of life support.
On top of everything, Pat’s medical expenses are piling up along with other bills for the home. Sue does not have access to Pat’s bank accounts and does not have enough money on her own to pay the bills.
Because Sue and Pat did not create power of attorney documents while they were both healthy, they are now in a difficult situation.
Update beneficiary designations:
This is another tool unmarried couples can use to make sure the other is taken care of financially. Making sure you update the beneficiary designations on things like insurance policies and retirement accounts, can allow you to leave those assets for a specific person. Without naming or updating beneficiary designations, the asset will most likely go to your next of kin or biological relatives. They may not be the person you wanted to leave that asset.
Even though updating beneficiary designations can be a useful tool, they are not a replacement for a comprehensive estate plan. Meet with an experienced estate planning attorney to make sure you and your partner’s futures are secure.