Estate Planning Tips for Unmarried Couples
According to a recent Pew Research Center study there has been a significant reduction in marriage rates while the number of couples cohabiting has risen. While it can be expected that laws will eventually follow this shift, it may be several more years before any are passed.
Marriage, while hopefully, based in love and mutual affection is also a business proposition and can have a huge financial impact on a family. Marriage also provides other rights like joint tax filing, hospital visits, homestead rights, social security benefits, and immigration status. While marriage recognizes and provides many legal rights to individuals, unmarried couples may not have those same rights, or may find that the laws are very difficult to navigate and enforce.
Do unmarried couples need to have an estate plan?
The simpler answer is yes. When a married couple fails to plan their estates, state and federal laws, while time-consuming, expensive, and not always meeting the spouse’s goals, exist to assist with the transfer of wealth and benefits to the surviving spouse. These similar laws do not exist for unmarried couples.
Also remember that there are broadly two reasons for estate planning, which are 1) what happens to the wealth I have accumulated when I pass, and 2) how will I be taken care if I have a period of incapacity? These two goals are no different for a married or unmarried couple, however, the unmarried couple has very little legal rights and it is as or more important for unmarried couples to create an estate plan.
What are the Core Components of an Estate Plan for Unmarried Couples?
Understanding Intestacy: In Michigan, if an individual dies without a will, there is a very specific statute that determines how beneficiaries of the estate will be determined. Generally, the spouse receives the greatest share of the estate. However, if you are not married the intestate statute will bypass your partner and give your wealth to your children, grandchildren, parents, siblings etc.
How Your House Ownership Will be Handled: Married couples are given a special type of joint ownership called “tenants by the entireties”. This form of ownership protects the spouse’s assets from the other spouses’ creditors. It also makes for an easy transfer after the passing of one spouse and does not allow for a spouse to sell the home without the authorization of the other spouse. While unmarried couples can own property as standard joint tenants, without the added protection of “tenants by the entirety” creditors can attack the asset. The good news is that there are ways to protect your house, avoid probate, and make sure that your partner receives your house after your passing through estate planning. Common techniques include putting the home in a revocable trust or creating a ladybird (enhanced life estate) deed.
Selecting a Personal Representative to Manage Your Will: A personal representative (sometimes referred to as an executor) is the person responsible for taking care of your estate after your passing. When a married person dies without a will the spouse is given the priority to act as the personal representative. With an unmarried spouse these same priorities are not provided; this is another reason while a will, at a minimum, is so important.
Powers of Attorney: A power of attorney grants an “agent” the ability to manage your finances. This right to act can take effect immediately or during times of incapacity. While married couples are not technically given the right to manage their spouses’ finances, many business and society in general often lets the spouse act even if there is no legal authority. The same rights are often not granted for unmarried couples. The power of attorney is one of the most critical components of an estate plan for unmarried couples as it affects you during your lifetime.
Patient Advocate and Hospital Visitation Rights: A patient advocate is a person you name who can make medical decisions on your behalf when you are unable to do so. Also, hospitals regularly limit patient visitors to family members, which many times partners are regrettably not considered family. Further while hospitals are often likely to take medical directions from a spouse, for unmarried couples’ hospitals are more likely to look to the parents or siblings for advice.
Guardianships: When an unmarried couple is raising a child where only one of their names is on the birth certificate, it is important that a guardianship document is created and spoke to in the will as well. This will help to reduce the risk that the child could be removed from the home after your passing.
Talking to Your Partner About Estate Planning
There are many reasons couples decide not to marry but failing to include your significant other in your estate plan can cause many unintended consequences for them and for you. To learn how you can include your partner in your estate plan, contact the experienced Livonia, MI estate planning firm Matt Devitt Law, PLC for a free, no-obligation consultation.
A bit about us – Matt Devitt Law is a full service estate planning law firm located in Livonia, MI. In addition to estate planning we also provide full service small business and real estate legal services.
We work with our surrounding communities including Livonia, Northville, Plymouth, Novi, Farmington Hills, and beyond. Our focus is on providing pragmatic value based solutions for your estate planning, small business, and real-estate legal needs. Give Matt a call (734) 335-0713 for a free consult.
** This is not legal advice