Estate Planning for Unmarried Partners
Estate planning for unmarried partners is crucial because unmarried partners do not share the same protections and benefits offered to married partners. For instance, in the event of incapacity, unmarried partners are not necessarily able, or easily allowed, to make decisions for each other. Furthermore, in the event of death, unmarried partners can not necessarily, or are not easily able to, inherit from one another. In this article, we discuss the most common and essential estate planning tools for unmarried partners. There are various estate planning methods unmarried partners can use to protect their loved ones in case anything happens.
Typical Estate Planning for Unmarried Partners
When an individual does not have a Last Will and Testament, their assets will pass by intestacy. Under intestacy, New York state law governs how assets are distributed. Let’s say that you do not have a Will and therefore your estate defaults to New York state law, then, your assets will be passed to
1.) your spouse, if any, or if none, then to
2.) your children, or if none then to
3.) your parents, or if none, then to
4.) your siblings, or, if none then to
5.) your aunts and uncles, and so forth.
If you die without being married but are still with a significant other, then, in the absence of a legal written instrument, your significant other will not be able to receive your assets. However, if you would like to pass some or all of your assets to your partner or significant other that you are not legally married to then the only way to accomplish this goal would be with the creation of a Will, joint ownership of assets, beneficiary designation of assets, or a Revocable (aka Living) Trust.
A Will as an Estate Planning tool for Unmarried Partners.
Let’s say that now you have a Will: upon your passing, your significant other will have to go through a court process called probate. During the probate process, your Will is going to be submitted to the Surrogate Court which will then become a public record. Your next of kin (in the order listed above) will then be given a chance to contest the Will. The next of kin will need to sign a Waiver of Process Consent to Probate. However, if the next of kin does not want to sign the Waiver then the Court will issue a Citation, contesting the Will. This can become problematic with unmarried partners, especially in cases where family members do not respect the relationship or even acknowledge the existence of the unmarried partner. If such an event could occur, a Revocable (aka Living) Trust may be a better estate planning tool for unmarried partners. Alternatively, if you simply want to ensure that your assets are left to your partner, you could also simply add a beneficiary designation or create a joint account for specific assets. This will transfer the asset directly to the significant other because beneficiary designations override the terms of a Will.
Joint Ownership or Beneficiary Designations as Estate Planning for Unmarried Partners.
Assets owned jointly or those that have valid beneficiary designations do not pass through your Will. After death, these assets will go to the joint survivor or the designated beneficiary, regardless of what is written in your Will. Although adding a joint account holder or beneficiary may seem like an attractive and cost-effective strategy, there can be problems. Common issues that can arise are:
- A joint owner can possibly misuse joint assets
- The joint assets could be exposed to joint owners’ creditors
- Removing a joint owner can be difficult
- Joint assets or assets with designated beneficiaries don’t provide asset protection
- Joint assets or assets with designated beneficiaries could incur taxes after death
One way to avoid the aforementioned issues is to create a Revocable (aka Living) Trust. Under a Revocable Trust, you get to maintain control and full authority over your assets. Then when you are incapacitated or have passed away, your unmarried partner or significant other can easily take over. Therefore, a trust is an exemplary component of estate planning for unmarried partners.
How a Revocable Living Trust for Unmarried Partners Works
One of the best ways to both avoid the Court and maintain privacy over your assets is by fully funding a Revocable Living Trust.
A Revocable Living Trust is a legal document created during your lifetime which allows you to control your assets while you are alive and direct who inherits these assets after your death. You can dictate the age when a beneficiary may inherit or even shield the assets from the beneficiary’s creditors. You may appoint yourself, or another individual, or a Trust company as a Trustee to manage your assets.
With a Revocable Living Trust, you will not need to go through the Court to provide for your loved ones, and if you are separated from your partner, you can simply amend the Trust and avoid the tedious process of retitling assets. This method provides the most flexibility in estate planning, while also providing the maximum protection for your unmarried partner. Indeed, a Revocable Living Trust gives you maximum control over your assets and gives your unmarried partner maximum protection after your death. With a Revocable Living Trust, you can
- Avoid the time, cost, loss of privacy, and loss of control in probate
- Avoid the issues with Wills and joint ownership and beneficiary designations.
- Avoid uncertainty and unintended consequences
- And if you and your partner separate, you can simply amend your trust and avoid the tedious process of retitling or dividing assets
How can an estate planning attorney help?
Unmarried partners do not share the same legal protections and benefits given to married partners, therefore proper estate planning is necessary to protect your partner after your death. One of the best first steps that you can take in creating a comprehensive estate plan is to consult with an experienced attorney. Contact the Law Office of Inna Fershteyn today at (718) 333-2394.