Allison Alley, CFP® discusses common issues unmarried couples face when it comes to financial and estate planning. Will they inherit each other’s assets? What certain rights do they have in the case of an emergency? Find out in this Question of the Week.
Hi, I’m Allison Alley, CERTIFIED FINANCIAL PLANNER™ with Pure Financial Advisors, and welcome to Question of the Week.
Today’s question is: what special problems do unmarried couples have to be concerned with in financial and estate planning?
Because unmarried couples don’t enjoy the same rights and protections as married couples, considerations for issues such as retirement planning, estate planning and taxes can be quite different. For example, number one: unmarried couples do not automatically inherit each other’s assets. So if one partner dies without a will, the assets are divided up according to the laws of the state, with assets typically going to either siblings or other relatives, and rarely going to the beloved partner. So it’s important for unmarried partners to have a will to make sure their assets are divided according to their wishes.
Number two: couples who aren’t married also don’t have the right to speak on behalf of the other in event of a medical emergency. If your partner loses consciousness or becomes incapacitated, someone has to be able to make a decision to go ahead with a medical procedure. That person should be you, but unless you have a health directive like a living will in place, you won’t be able to make that decision on behalf of your partner.
Number 3: tax and estate issues are also more complicated. One example is home ownership. If one partner owns a home and he or she dies, the surviving partner might be left homeless. The way to resolve this is making sure assets are properly titled, in this case using joint tenancy with rights of survivorship.
With a little extra consideration, unmarried couples can make sure their partners and assets are taken care of according to their wishes. Hope that helps; I’m Allison Alley, and that was your Question of the Week.