Estate planning is often considered something you only need to worry about once you get married. Or maybe you think you only need estate planning if you have young children or are really super wealthy. But we all want a say in where our assets go and who makes decisions for us if something happens to us. Getting your estate plan in order puts you in the driver’s seat to tell your family and loved ones your wishes should you become incapacitated or pass away.
Estate planning is governed by state laws and those laws only recognize two kinds of people – single or legally married. It is unfortunate that the law does not recognize the spectrum of relationships that people create. If you have a partner and are not legally married, when you die or if you become incapacitated, the state will view you as single and will treat you as such. Your partner would not have any rights and would be considered a legal stranger. They will be at the mercy of the choices of your family – parents, siblings, adult children.
But there is hope! One of the things I love about estate planning is the ability to help people make sure that their wishes are honored and some simple planning can help make that happen.
If you do no planning and pass away, your assets will be distributed via inheritance law – first to your children, then to your parents (if living), then to siblings, and then, if necessary, to even more distant relatives. Your unmarried partner is not entitled to any of your assets that you have built during your life together.
If you and your partner own a home together and one of you dies, the deceased partner’s share does NOT go to the living partner. Instead it goes to the closest living relative. Your partner could end up only owning half of the house they live in! If only one partner owns the house and they die, the surviving partner is at the mercy of relatives to stay in their home.
You may even be at risk of paying estate taxes that married couples would not have to pay.
A Will can ensure that assets are distributed to the person you have chosen to spend your life with. A Trust can go even further to ensure assets are protected from creditors and manage assets in the case of incapacity.
Should you become incapacitated, your partner will have no access to your accounts to help pay for bills, apply for governmental benefits for you, manage any investments or even help run your business, among other needs. To gain the ability to do so, your partner would need to seek guardianship over you via the court system, which can be timely and costly, during an already stressful time.
A Durable Power of Attorney for Financial Matters is a powerful tool that gives power to the person you appoint to handle financial matters for you should you become incapacitated. We recommend signing an updated Durable Power of Attorney at least every five years to ensure that there is no question what your wishes are.
If you want your partner to have a say in how your health care is handled if you become terminally ill or incapacitated, you should be sure to grant your partner a medical power of attorney. This is particularly important if you are unmarried as your family could leave your partner totally out of the medical decision-making process, and even deny your partner the right to visit you in the hospital.
Estate planning gives us great tools to make sure that your wishes are honored. These situations do not just come up in families with existing tensions. During a high stress situation like a loved one’s death or incapacity, even the most loving family can make hurtful decisions, or just be at a lost as to what to do. By doing some simple planning now, you can avoid hassles and potential heartache if something happens to you or your partner. The last thing you would want is for your family to have to work through these issues while they are grieving.
If you would like to make a plan for you and your partner, or if you are not sure if the plan you have will protect you, give us a call for a complimentary 15-minute phone call to discuss your goals and objectives. Ask how you can get your Estate Analysis Planning Session ($750 value) for free! We would love to help you Make a Plan!