While estate planning is essential for married couples, it can be even more important to consider for unmarried partners. Estate planning determines where your assets go when you pass away, and who is able to make decisions for you if you become incapacitated. Without proper estate planning, unmarried partners won’t be able to inherit from each other or make critical end-of-life decisions regarding medical care.
Thankfully, there are several steps that unmarried partners can take to protect their partners if circumstances arise, leading them to make these difficult decisions. Below, we’re discussing the various ways that unmarried partners can protect each other through proper estate planning processes, and the advantages of doing so.
Below are just a few ways that you can assure mutual protection of interests in an unmarried partnership through the estate planning process:
1. Writing a will
Writing a will is essential in the estate planning process. A will allows you to leave your assets to your partner and anyone else that you choose, as well as name a guardian for children in your care. If you die without a will, the allocation of your assets follows the rules of intestate succession in your state — meaning that they will be divided in accordance with state law. Intestate succession prioritizes your direct heirs and beneficiaries naturally, which may not be in alignment with your wishes. That’s why planning ahead can help to guarantee the interests of your family members and preferences.
Additionally, the assets that your will controls will have to go through probate before they can be distributed. Probate is the process of your will becoming a part of the public record. The nature of the process can lead to family members contesting the will. In the event of a successful will contest, the non-family member may not receive many, if any assets that you have left for them.
2. Living trusts
A living trust is a legal document that establishes a trust for any assets that you wish to transfer into it, and it designates a trustee. The trustee will have the responsibility of managing these assets. This type of trust is designed to allow a trustee to oversee the smooth transfer of your assets after death.
Trusts can replace or complement a will since it has the same assets that a will would include. One advantage of a living trust is that it allows you to avoid probate, and have your assets distributed immediately after your death. Living trusts can be irrevocable or revocable, meaning that you have the option to relinquish certain rights of control over the trust or retain those rights during your lifetime. A revocable trust gives the settlor the power to change and amend the rules of the trust at any time, and they may also change beneficiaries as they see fit.
3. Establishing joint ownership of assets
Joint ownership of assets is a binding contract where unmarried partners own an undivided interest in one or more assets. If one of the partners dies, the assets in joint ownership pass automatically to the other partner in the relationship. One benefit to establishing joint ownership of assets is that the process of creating joint ownership is very straightforward. All that you would need to do is sign some paperwork that puts both names on the title document of the asset such as the deed to a house or the title to a vehicle.
4. Power of attorney (POA)
A power of attorney (POA) is a document that allows you to designate someone to act on your behalf if you were to become incapacitated. A financial power of attorney gives your partner the authority to handle financial matters for you in the instance of illness, accident, or other situations that would incapacitate you or make you unfit to determine your own choices. With a POA in place for your finances, you can give your partner as much authority over your finances as you’d like. If your partner chooses to, they can also hire professionals to help manage the situation and pay them out of your assets.
5. Designating beneficiaries for your bank or retirement accounts
Perhaps you and your partner may not want to share ownership of all assets at this time. If you’re in this phase of your relationship, it’s important to plan ahead, as you cannot share retirement accounts after your death. You’ll need another way to ensure that the asset transfer occurs. Asking for a beneficiary designation form from the bank or account custodian, and naming your partner as the beneficiary is how you can ensure that the funds go to your partner in the event of your death. The process is free. If you change your mind later, you can always name another beneficiary.
Estate planning is nuanced and can be difficult to deal with. The team at Ascent Law is here to help. Our experts are ready to sit down with you and walk you through every step of the process. For more information and to book your free intro call today, please give us a call at (801)-432-8682.