Special Considerations for Unmarried Couples on Their Future Planning

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Unmarried Couples Have Different Options When it Comes to Their Future Planning

Estate planning and financial planning for unmarried couples encompasses a range of considerations including the impact of domestic partnership registration, tax matters, and comprehensive planning. By becoming registered domestic partners, couples may gain certain legal rights. On the other hand, they must still take proactive steps to fully protect their interests. Through careful planning and proactive efforts, unmarried couples can establish a solid foundation for their estate plans. This protects their rights and the realization of their goals.

Tax Planning

There are some tax-planning opportunities that are unavailable to married couples. For example, if there is a substantial disparity in partners’ incomes, having the higher earning partner pay deductible expenses (such as mortgage payments or charitable contributions) may be preferable. It may also be possible to reduce taxes by titling investments or other income-producing assets in the lower earner’s name.

Breakup Arrangements for Unmarried Couples

Without the protection of divorce laws, you should consider signing a cohabitation or domestic partnership agreement to provide for the division of assets in the event you split up. This is especially important if assets are titled in the name of one partner or the other for tax-planning purposes.

Retirement Planning

Joint ownership may also be an option for certain assets, such as real estate and bank or brokerage accounts. However, keep in mind that this type of ownership may raise gift or income tax issues. In such circumstances, talk to your tax advisor.

When planning for retirement, keep in mind that unmarried couples often are at a disadvantage when it comes to government and employee benefits. Spouses who have been married for at least ten years, for example, can collect Social Security benefits based on their spouse’s (or ex-spouse’s) work history. Therefore, it is important to do your research and learn which retirement benefits will and will not be available.

Unmarried Couples Guide to Estate Planning

When married couples neglect to prepare an estate plan, state law provides one for them. Unmarried couples have no such backup plan. Each of you carefully spell out how you wish to distribute assets. This ensures the surviving partner is left with the assets they deserve. Take advantage of tools such as wills and trusts, strategic titling of property (for example, joint ownership), and proper beneficiary designations in retirement accounts and life insurance policies.

You also need to prepare advance health care directives and financial powers of attorney if you want your partner to have the authority to make health care decisions or manage your finances if you become incapacitated. Legally, unmarried partners are considered unrelated, so absent these documents they have little or no right to participate in health care and end-of-life decisions.

Make Sure You Have it in Writing.

Unmarried couples can achieve many of the same financial and estate planning objectives as married couples. You must work to ensure that your wishes are carried out. This requires careful planning — with the assistance of financial and legal professionals — and thorough documentation.

It is the comprehensive estate plan that ties all the elements together. An estate plan can ensure that the partners’ wishes are respected, and their assets protected. Seeking professional guidance from attorneys experienced in estate planning for unmarried couples is crucial to navigating the pathways effectively.