Estate Planning for Unmarried Couples: What You Need to Know

[Please note: this post and all other posts should not be relied upon as legal advice, please contact us to ensure accurate, up to date, and timely legal advice and representation before taking any actions.]

Estate Planning for Unmarried Couples: What You Need to Know

Estate planning is essential for everyone, but it's especially important for unmarried couples. Unlike married couples, who have certain legal protections under state and federal law, unmarried partners do not automatically have rights to inherit each other’s assets or make important decisions on behalf of their partner. Proper estate planning is the key to ensuring that your wishes are followed and that your partner is protected in the event of illness or death.

Why Estate Planning is Critical for Unmarried Couples

In Pennsylvania, the law does not automatically grant inheritance rights to unmarried partners, no matter how long you’ve been together. Without proper planning, your assets could pass to your blood relatives instead of your partner, and your partner could be left out of key medical and financial decisions.

An estate plan allows you to specify exactly how you want your assets distributed and who should handle important responsibilities if you become incapacitated. By creating a comprehensive plan, you ensure that your partner is protected and that your wishes are respected.

Key Documents for Unmarried Couples

1. Wills
   A will is the cornerstone of your estate plan. It allows you to specify who will inherit your assets, including property, financial accounts, and personal items. Without a will, Pennsylvania’s intestacy laws will determine who inherits your estate, and your partner will not be entitled to anything unless you specifically name them in the will.

2. Trusts
   A trust can provide additional control and protection for your partner. With a revocable living trust, you can transfer assets into the trust during your lifetime and specify that your partner will benefit from them after your death. Trusts also help avoid the probate process, ensuring that your partner can access assets more quickly and privately.

3. Power of Attorney
   If you become incapacitated, a power of attorney allows you to designate your partner to manage your financial affairs. Without this document, your partner may not have the legal authority to access your accounts or make important decisions, which could complicate an already difficult situation.

4. Healthcare Directive and Medical Power of Attorney
   A healthcare directive (or living will) and medical power of attorney ensure that your partner can make medical decisions on your behalf if you're unable to do so. This is especially important for unmarried couples, as hospitals and doctors may defer to blood relatives if no legal documents are in place.

5. Beneficiary Designations
   For assets like life insurance policies, retirement accounts, and payable-on-death bank accounts, you can name your partner as the beneficiary. Make sure these designations are up to date and match the intentions laid out in your will or trust.

6. Joint Ownership of Property
   If you and your partner own property together, it’s important to structure ownership in a way that protects each of you. For example, joint tenancy with right of survivorship allows the surviving partner to automatically inherit the property when the other passes away.

Other Considerations

• Tax Planning
  Unmarried couples do not benefit from the same estate tax exemptions that married couples do. In Pennsylvania, the inheritance tax rate for non-relatives is 15%, which can significantly impact your partner’s inheritance. A properly structured estate plan, including trusts or gifting strategies, can help minimize the tax burden on your partner.

• Review and Update Your Plan
  It’s important to regularly review and update your estate plan, especially if your relationship changes, your financial situation evolves, or laws are updated. An outdated plan could cause complications or fail to reflect your current wishes.

Consult an Estate Planning Attorney

Estate planning for unmarried couples can be complex, but it’s crucial to ensure that your partner is protected and that your wishes are followed. Working with an experienced estate planning attorney can help you create a comprehensive plan tailored to your unique situation, providing peace of mind for you and your partner.

In summary, without proper estate planning, unmarried couples face significant legal challenges in the event of illness or death. By creating a plan that includes a will, power of attorney, healthcare directive, and other essential documents, you can ensure that your partner is provided for and that your wishes are honored. Please consider reaching out to our office for more information and to set up a consultation so that we can review your unique situation and draft a plan that meets your needs.