Having an estate plan is always a smart decision. It can help you save money on taxes, plus it can help ensure a secure financial future for you and your family. In most cases estate plans are fairly straightforward, but this isn’t the case for unmarried couples. Estate planning for unmarried couples can be very complex.
If there is some reason why you either don’t want to get married or can’t, it is important to have a financial plan that works to your advantage. Society provides many advantages to the married couple not available to those that choose not to marry so you’ll have to find ways to work around this.
To protect both people in the relationship you will have to take specific steps with your estate plan.
- Property Titling – If you own property together you’ll want to be careful on how the property is titled. When the property you own is titled it must contain both names, as well as the words, Joint Tenants With Right of Survivorship. Without these words the ownership will be considered Tenants in Common. The difference being that the former will allow the property to pass automatically to the surviving partner, while the latter will put the deceased’s ownership of the property into probate where the partner may be denied ownership. It is also important that both partners can prove they made contributions to the ownership of the property for reasons of estate taxes. Keeping good records is significant.
- Trust – A trust is another way in which to protect each partner. If both partners create a trust and fund it with their property, they can designate that the other partner is the beneficiary of that trust if something should happen to them.
- Retirement Funds and Bank Accounts – This is one of the easiest planning strategies for unmarried couples. To ensure that your partner inherits these accounts all that is necessary is that you designate them as the beneficiary for your retirement and bank accounts. You can also designate your partner as the beneficiary on your life insurance. Do not forget to name contingent beneficiaries.
- A Will – The will is one of the most important elements of estate planning for everyone, but it is especially important for unmarried couples. To ensure that your partner receives the inheritance that you would like them to have, you can name them in your will, along with what you would like them to receive. Keep in mind, a will is much easier to contest than a trust.
- Advanced Medical Directives – If you would like your partner to be the person that handles your medical and financial decisions if you are incapacitated and unable to do so for yourself, you need Advanced Medical Directives. These documents include a Medical Power of Attorney and a Living Will. You will also want a Durable Power of Attorney to give your partner power over legal and financial decisions.
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