Over the past few decades, the number of partnered adults who have no plans to marry has skyrocketed. And with some careful estate planning, unmarried couples are able to realize just about all of the decisionmaking, financial, and tax-related benefits married couples enjoy—all without a marriage license. What should you do to ensure that you've provided your partner with all the powers you'd like them to have?
What Benefits Does Marriage Confer?
A marriage license is essentially a shorthand way to confer the following legal and financial benefits:
- The ability to file taxes jointly (generally resulting in a lower overall tax rate or tax liability)
- The ability to make life-or-death medical decisions on the spouse's behalf if they are incapacitated or unable to make their own decisions
- The ability to inherit from a spouse (even without a will in most states)
- A presumption that any children born during the marriage are the biological children of the two spouses (thereby avoiding paternity tests and proceedings or petitions for name change)
While these benefits can make a difference in a couple's financial situation, the process of divorcing and untangling all these assets can often be a messy and complicated one.
How Can You Realize the Benefits of Marriage Through Estate Planning?
By meeting with an estate planning attorney and obtaining a few different documents, you and your partner should be able to take part in just about all the benefits of marriage.
First, you'll need a will to set out how you'd like your assets divided (or transferred) if you predecease your partner. You may want to leave your assets to your children, giving your partner a life estate in your shared home or a portion of your retirement assets to avoid leaving them high and dry. In other cases, you may want to leave your entire estate to your partner to do with as he or she wishes.
You may also want to consider a twist on the standard prenuptial agreement or a "decoupling" agreement that allows for the division of assets without a court battle.
Finally, you can create a durable power of attorney that will allow your partner to make sensitive medical or financial decisions if you're incapacitated. Even something as common as a car accident that leaves you hospitalized could require your partner to step in and pay bills, contact your employer, and take other steps on your behalf; but without the legal ties of marriage, it can be tough for your partner to assert these rights. Having a power of attorney can ensure that your partner will be able to advocate for you.
Speak with an estate planning attorney for more information.Share