The number of unmarried couples living together continues to rise throughout the country. Those who have chosen to forgo marriage, either in the short or long-term, can take steps to protect their partner into the future.
Why is it important to take steps to protect my partner?
If a spouse dies and no estate plan is in place, figuring out the estate is difficult. However, most state laws dictate that the surviving spouse gets the estate. This safety net is not available for those who live together but are not married.
Although arguably antiquated, the state law continues to generally offer this protection to married couples. As a result, state law would not provide assets to a partner who is not a legal spouse. Instead, the estate would likely go to our children, parents, siblings, or other relatives. This is one of the main reasons to get an estate plan.
The other big reason? If we are incapacitated, in a hospital and unable to communicate our wishes with loved ones, it is possible hospital administrators may not even let our partner in the room let alone give them the ability to help make decisions on our behalf. An estate plan can give them this power — can help let them in that room with us when we need them most.
How can I help protect my loved one in the event of my death?
State law may not help, but you can take matters into your own hands. An estate plan allows for this control.
- Will. This legal document gives us an opportunity to say where we want our assets to go. In most cases, it will lead the estate administrator to distribute assets once they settle the estate.
- Trust. This is a legal tool we can use to have more control over how and when we distribute our assets. If we want the asset to help fund our partner well into the future without the burden of actually managing the asset, we could use a trust to provide regular distributions while a trustee takes care of managing and growing the asset on their behalf. A trust, depending on how we structure it, can also provide additional protection from creditors and tax benefits.
- Power of attorney. It is also helpful to put together a power of attorney (POA) for health care and financial matters. This legal document allows us to name an individual who we trust to manage our assets and/or health care decisions in the event of incapacitation. This allows us to name our partner as the individual to take care of these matters if we are in the hospital and unable to do so ourselves. This is one of the most important legal tools to get our partner into the room, as noted above.
It is also important to note that there are some assets that do not transfer through the estate plan. Instead, a beneficiary designation may control the distribution of that specific asset. This is generally a fill in the blank question when we first set up the account, stating who we would like to get the asset in the event of our death. Common examples include insurance policies, 401(k)s and other retirement accounts as well as many bank accounts.