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Estate Planning Tips for Unmarried Couples


Without the automatic legal protections afforded by marriage, unmarried partners must be proactive in managing their assets to ensure that their wishes are honored and their financial futures secured. From establishing wills and trusts to understanding state-specific estate laws it’s important to consider essential strategies that unmarried couples can employ to safeguard their assets and provide for each other in the event of unexpected circumstances. A financial advisor can help you with your estate planning needs, as well as much of your long-term financial goals.

1. Protect Your Assets

Unlike married couples, unmarried partners do not automatically benefit from the legal protections typically afforded by marriage when it comes to assets. For example, without the legal framework of marriage, the surviving partner may not inherit any of the deceased’s assets if one partner passes away without a will. This lack of automatic inheritance rights can lead to significant financial and emotional distress. Furthermore, unmarried couples often face challenges in securing property rights, accessing tax benefits and claiming entitlements to retirement funds.

To navigate these complexities, unmarried couples must consider several legal tools and documents to protect their assets and ensure their intentions are honored. By addressing these issues, unmarried couples can mitigate the risks associated with asset distribution and ensure that their financial and emotional investments are secured, regardless of marital status.

2. Be Aware of State Rules

Each state in the U.S. has its own set of laws governing estate planning, which can significantly affect the distribution of assets, taxation and legal rights upon the death of a partner. Ignorance of these rules can lead to unintended beneficiaries, increased legal costs and potential conflicts among surviving family members. It’s important to stay on top of these rules as things change or as you move from one state to another.

3. Know What Rights You Don’t Have

In today’s society, the distinction between the rights of married and unmarried couples is pronounced, particularly from a legal standpoint. This differentiation is deeply embedded in both common law and statutory provisions, which often favor married couples with a range of financial and decision-making benefits not extended to those who are unmarried. Here are a few categories where you might find that unmarried individuals do not have the rights of those who are married.

  • Inheriting assets from each other without a will.
  • Making healthcare decisions for each other.
  • Receiving Social Security benefits.
  • Being able to assess the financial assets of your partner after their death.
  • Handling decisions on jointly-owned assets after the death of a partner.

It’s important to plan ahead with specific legal documentation in each of these areas before death so that your assets are protected.

4. Know What a Will Won’t Cover

An advisor offering estate planning tips to an unmarried couple.

When planning for the future, many individuals turn to drafting a will, a fundamental component of estate planning. A will, legally known as a testament, allows a person, referred to as the testator, to designate who will receive their property and possessions after their death. This document is crucial for ensuring that the testator’s wishes are respected and that the distribution of their estate is managed efficiently according to their preferences. However, it is vital to recognize that wills have limitations and do not govern all types of assets.

The implications of not understanding the limitations of wills can be particularly significant for unmarried couples. A common misconception is that a will can fully dictate the distribution of all the deceased’s assets. This misunderstanding can lead to unexpected outcomes, where significant others may find themselves legally excluded from inheriting assets, especially if proper beneficiary designations are not in place. For unmarried couples, it is crucial to make explicit arrangements outside of the will for the distribution of assets that do not fall under its governance.

5. Name Beneficiaries

The act of naming beneficiaries of specific accounts is a critical component of estate planning, especially for unmarried couples. It ensures that assets are distributed according to their wishes, circumventing default legal protocols that might not reflect their intentions. It’s important to recognize that while naming each other as a beneficiary is a key step in estate planning, it is not a foolproof solution to all legal issues. It requires careful consideration, and in some cases, legal advice to navigate the complex interplay of laws and personal wishes effectively.

6. Understand the Estate Tax

The estate tax, often referred to as the inheritance or death tax, also plays a pivotal role for those who are unmarried. This tax is levied on the estate of a deceased person. The modern form of this tax was established by the Revenue Act of 1916, primarily as a means to generate government revenue and to prevent the excessive accumulation of wealth within a limited number of families.

For unmarried couples, the implications of the estate tax can be particularly severe due to the absence of spousal exemptions that married couples enjoy. When one partner in an unmarried couple passes away, the surviving partner could face a significant tax burden if the estate exceeds the exemption threshold. It’s important to plan ahead for any potential tax consequences in order to protect your own interests and earned assets that you’ve accumulated with your partner.

Bottom Line

An unmarried couple getting estate planning tips from an advisor.

Unmarried couples face unique legal and financial challenges that underscore the importance of proactive estate planning. By understanding and utilizing tools such as wills, trusts and beneficiary designations, these couples can safeguard their assets and ensure their wishes are honored. Additionally, being aware of state-specific rules and the limitations of wills can prevent unintended consequences and ensure a comprehensive approach to asset distribution.

Tips for Estate Planning

  • A financial advisor can help you prepare for your estate planning needs while helping you with the entire financial picture, from building wealth to retirement planning. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Estate planning can be hard no matter what your unique needs are. It’s important for you to understand the potential dangers of DIY estate planning before trying to go out on your own to do it yourself, however, so that you don’t miss anything important that an expert would catch.

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