Is it Necessary for Unmarried Couples to Have an Estate Plan?

In the 21st century, love manifests in various ways, and for an increasing number of couples, "forever" doesn't necessarily involve a marriage certificate. Although this is a highly personal decision, remaining unmarried introduces layers of legal and financial complexity that must be considered, particularly regarding safeguarding your assets and loved ones.

Picture this: you've created a life with your partner, perhaps purchased a home and started a family. You share expenses, aspirations, and plans for the future. However, without the legal safeguards of marriage, what occurs if one of you passes away? And what if one of you becomes incapacitated first? Some questions to consider: Who will make medical decisions for you or your partner? Without marriage or legal protections, it probably won't be the person you desire. 

Who receives what? Without marriage or legal documentation, things probably won't turn out the way you desire. How will your children be supported? This largely depends on who their biological parents are and the “blood” relationship line, unless you have an estate plan to make sure your children are cared for by those you prefer, rather than those the law would select.

Most importantly, how can you steer clear of a court process and potential conflict during an already emotional period?

The Legal Situation for Unmarried Couples

While married couples automatically gain specific legal protections, unmarried couples need to take intentional actions to ensure their desires are respected. Legally, unmarried partners are considered strangers, irrespective of the duration of their relationship or how interconnected their lives are.

This legal gap becomes especially evident during crises. If you're hospitalized, your partner might be refused visitation rights or the authority to make medical decisions for you. Without proper planning, if you pass away, your partner might be left with nothing, not even the home you've shared for years.

A recent survey conducted by Caring.com reveals that just 24% of Americans possess a will. This lack of preparation exposes millions to potential legal and financial difficulties that can intensify grief with avoidable burdens. It’s entirely preventable.

Estate Planning Checklist for Unmarried Couples

Here’s an in-depth examination of crucial areas where unmarried couples should be particularly proactive in their estate planning:

✔ Home Sweet Home, But Whose Name is on the Deed?

Many unmarried couples buy a home together. However, without a will or living trust clearly specifying ownership and inheritance intentions, the surviving partner could encounter major difficulties. Here's why:

Intestacy Laws: If you pass away without a will, Hawaii, or your state's intestacy laws if you live elsewhere, determine who inherits your property. These laws generally favor spouses and blood relatives, which means your unmarried partner might have limited or no rights to the home you both shared.

Tax Implications: Inheritance laws for married couples often include tax advantages that unmarried couples don't get. The surviving partner might face a substantial estate tax bill, possibly forcing them to sell the home to pay the costs.

Title Matters: The way you title your property greatly affects what happens after death. Joint tenancy with rights of survivorship provides some protection, but this method doesn't cover other estate planning issues and might have unexpected tax consequences.

✔ Ensuring Support for Your Children

Having children together introduces additional complexity for unmarried couples. Here's how inadequate estate planning can lead to significant difficulties:

Guardianship Issues: If one parent dies, the surviving parent may not automatically gain legal guardianship rights (particularly if that person isn’t the biological parent, which is often the case for same-sex couples). This situation could result in legal disputes with other family members or even state involvement in severe cases.

Inheritance Issues: In the absence of a will or trust, your children might not inherit your assets as you intended. Intestacy laws could lead to asset distribution in ways you wouldn't have chosen, possibly leaving your children without sufficient financial support.

Challenges with Blended Families: If either partner has children from previous relationships, the potential for conflict increases. Without clear documentation, children from earlier relationships may find themselves in conflict with the surviving partner, causing painful family divisions during an already challenging time.

✔ Beyond the Home: Safeguarding All Your Assets & Reducing Taxes

Unmarried couples frequently gather substantial assets together — such as bank accounts, investments, retirement funds, and more. Without a plan:

Ownership Disputes Can Emerge: Unclear ownership can result in legal conflicts between surviving partners and the deceased's family members.

Unnecessary Tax Liabilities: Unmarried couples often miss the tax benefits available to married couples, which might lead to a higher tax burden for the surviving partner.

Retirement Account Issues: Retirement accounts like 401(k)s and IRAs require specific beneficiary designations. Without these, your partner might not have any claim to these assets, regardless of your intentions. 

✔ Healthcare Decisions and End-of-Life Care

For unmarried couples, one of the most pressing issues is managing medical emergencies and end-of-life decisions:

Medical Decision-Making: In the absence of healthcare directives, your partner might not have the legal authority to make medical decisions for you if you become incapacitated.

Hospital Visitation Rights: Some healthcare facilities restrict visitation to family members in intensive care. Without the necessary documentation, your partner might be denied access during crucial times.

Funeral and Burial Decisions: Typically, legal next of kin are responsible for making funeral arrangements. Without documentation expressing your wishes, your partner might not have a say in the handling of your remains, even if you've thoroughly discussed your preferences.

✔ Digital Assets and Modern Considerations

In our increasingly digital world, estate planning must also cover digital assets:

Access to Online Accounts: From social media to cryptocurrency, digital assets need to be explicitly included in your estate plan to ensure your partner can access them.

Business Interests: If you own a business, having a clear succession plan is crucial to avoid disruption and protect your partner's financial interests.

Pets: Although many see pets as family members, legally they are considered property. Specific arrangements must be made to ensure your cherished pets continue to receive proper care.

Take Control of Your Future

Estate planning is not solely for the wealthy or elderly; it's for anyone wanting to safeguard their loved ones and valued assets. For unmarried couples, establishing a legally robust estate plan is crucial. A conventional estate plan, DIY plan, or inexpensive legal plan is inadequate. Instead, a Life & Legacy Plan is necessary.

At my firm, I can assist you in crafting a customized estate plan for your life and legacy. I'll help you navigate the complexities and create a personalized plan that simplifies everything, ensuring that when one of you becomes incapacitated or passes away, the survivor receives all the necessary support without complications.

This includes:

Clearly Addressing Ownership of All Assets and Avoiding Probate: I'll collaborate with you to determine the optimal way to manage the transfer of jointly and individually owned assets — such as your home, bank accounts, investments, retirement accounts, and personal property — in a manner that reduces tax liabilities, bypasses probate court, and ensures a smooth transition for your surviving partner. This allows your loved ones to focus on healing and honoring your memory, free from legal challenges.

Establishing Guardianship and Financial Provisions for Children: If you have children together or individually, I will help you legally appoint guardians, create trusts if necessary, and secure your children's financial future. If you have children from previous relationships, I will take special care to minimize or avoid potential conflicts between your children and your surviving partner, ensuring a smoother transition and respecting your wishes.

Planning for Incapacity of Either Partner: I'll establish powers of attorney and healthcare directives so your partner can efficiently manage your affairs and make medical decisions on your behalf if you become unable to do so yourself.

Ensure Your Peace of Mind Now

Act now rather than later — begin taking proactive measures today to safeguard your loved ones. Arrange a planning session with me to initiate the process. Together, we can create a plan that delivers clarity, security, and peace of mind for you and your family, regardless of what the future may bring.

This article is a service of the Law Office of Keoni Souza, an estate planning law firm in Honolulu, Hawai`i. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That is why we offer a Family Wealth Planning Session, during which you will get more financially organized than you have ever been before and make all the best choices for the people you love. You can begin by contacting our office today to schedule a planning session and mention this article to find out how to get this $750 session at no charge.

Disclaimer: All information on this website is for informational purposes only and is not legal advice. You should contact an attorney trained to work with families on estate planning matters regarding your specific situation. Use of and access to this website or any of the email links contained within the site do not create an attorney-client relationship between the Law Office of Keoni Souza, LLC, and any users or any other party.