Estate Planning for Unmarried Couples

When you are in an unmarried relationship there are extra steps you need to take to protect each other. You are not automatically set up as each other’s beneficiaries. Additionally, you would have no rights if a probate was involved. In this article, we will go over the basics of estate planning for unmarried couples.

Joint Tenants with Rights of Survivorship

Owning real property and accounts as joint tenants with rights of survivorship allows you to pass the property automatically to the surviving partner. Be careful that things are titled this way verses tenants in common. With tenants in common the deceased’s partners share would not automatically go to the survivor. Rather the asset is distributed by the laws of probate or their will.

Update Beneficiary Designations

You will also want to update beneficiary designations on retirement accounts and insurance policies. However, unmarried couples lose some benefits when inheriting IRA accounts. On one hand, if you are inheriting an IRA as a spouse, you can transfer the funds into a spousal IRA account and take distributions based on your age and life expectancy. On the other hand, an unmarried partner must take full distributions from the account within 10 years of the account holders’ death.

Setting Up a Trust

A trust is a great avenue of estate planning for unmarried couples. It allows you to avoid probate and protect your partner. You have two options for setting up your trust. First, you can create one jointly. When one partner passes, the surviving partner maintains control of the trust. When both partners pass, the funds will be distributed to agreed upon beneficiaries. The second option is to set up separate trusts. This can allow you to keep your finances separate now and leave your partner as a beneficiary when you pass.

Proper Planning for Unmarried Couples

Estate planning for unmarried couples can be complex and a lot is at stake. Meet with a qualified estate planner who can help you understand your options and guide you through the process.

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