Many people think that couples should only make joint long-term financial decisions once they are legally married, but that is untrue. If two people are in a relationship and plan on having a future together, including cohabitation, then estate planning is a wise decision.

Not every couple who has children or lives together has plans for marriage. In fact, not marrying is becoming even more common as times change. Since 1996, unmarried couples in the U.S. who cohabitate have increased from 6 million partners to 17 million partners. And since they often share property and assets, it is essential that unmarried couples focus on estate planning.

Why estate planning is important for unmarried couples

Estate planning means determining how your property will be distributed after death or future incapacitation due to health conditions. The goal is to have financial security for one partner, and other beneficiaries, if unforeseen circumstances affect the other partner, such as death or critical illness.

An estate plan can include:

  • Wills.
  • A possible trust.
  • Appointing a power of attorney.
  • Designated beneficiaries (including the partner as well as other loved ones).
  • Health care directives.

Unmarried couples should have an estate plan because without being legally married, neither is automatically entitled to the other’s assets in the case of their passing. The property will usually go to the next of kin and your state of residence ultimately decides. An estate plan can also ensure that partners have a say in health care and financial decisions if either one is incapacitated. 

How to do estate planning as an unmarried couple

Estate planning for unmarried couples involves similar documents to those who are married. But it focuses on specifying what their partners are entitled to in order to avoid any future misunderstandings with other beneficiaries as well as legal requirements. A CERTIFIED FINANCIAL PLANNER™ professional can guide you and your partner work with an attorney in taking the following steps:

  • Write a will — Being married is not the only reason to have a will. Couples who have assets should have a legally binding will, especially if they have children. Both halves of an unmarried couple should have individual wills specifying what property the other half is entitled to.
  • Properly title joint assets — If you plan to inherit your partner’s share of a joint asset after they pass away, that should be specified in the title. Filing the asset as “joint tenants with rights of survivorship” will allow the account to automatically be transferred over to the surviving partner.
  • Update beneficiaries — It is important to remember that the beneficiary named on accounts, such as a retirement account, may override who is specified in the will. You must ensure that the beneficiary listed on an account is your partner if you want them to be entitled to the asset.
  • Specify health care directives — If you know how you would like your health to be handled in the future if you are unable to do so yourself, such as being on life support, then that will be specified in your health care directive. You can also specify if you want your partner to be in charge of future medical decisions if you are incapacitated as well as ensure that your wishes are properly carried out.
  • Appoint durable power of attorney — There are many financial tasks that need to be carried out after your passing, such as filing taxes and accessing bank accounts. You can appoint your partner as a durable power of attorney so that they can manage your finances in the event that you pass away or become incapacitated. If you are not married, they will be unable to access your finances without power of attorney.

Talk to a ProVise CFP® professional about estate planning as an unmarried couple

Even if a couple does not get married, they can still share finances, assets and children. That is why unmarried couples must have an estate plan to ensure that their assets are properly distributed to one another if either one passes away. 

At ProVise Management Group, our CFP® professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about estate planning as an unmarried couple? Contact ProVise today to schedule a complimentary consultation.