Planning for Unmarried Life Partners

Everyone needs to plan for their future. Some just need to plan a little harder. The current laws against gay marriage make early planning a necessity for those in the LGBT community. Under federal law, marriage provides more than 1,000 benefits which are unavailable to same sex partners. Marriage also provides many important legal presumptions and default provisions that protect the family unit. Same sex partners and their families must engage in proactive planning to compensate for the lack of these marital benefits.

Whether or not the law recognizes gay marriage, you know who your family is. You also know that you need to take proactive steps to protect them and yourself in the future. Now is the time for you TO MAP WISHES.

–          Tax treatment

Unmarried couples face many tax issues, such as;

  • They cannot file jointly.
  • They cannot deduct medical expenses.
  • They cannot make unlimited gifts between partners (gift tax return on amounts over $13,000 per person per year).

–          Other problems

Other obstacles unmarried couples must plan around are;

  • They are not entitled to spousal or death benefits under Social Security.
  • They are not eligible for employer’s health insurance or survivor annuity on pension.
  • The estates do not automatically go to their partner if they die without a will.
  • Because there is no formal way to end the relationship, if a separation should occur, all accounts and documents will need to be retitled and revised.

–          Make a Plan
Make sure to talk to your partner about important issues, and don’t be afraid to ask tough questions such as;

  • If something were to happen to you, who would you want to handle your finances, health decisions, or children?
  • How is your property titled between you and your partner? What happens if you break up? What happens if someone dies?
  • How do you plan to pay for retirement? How would you pay for medical care or a nursing home?

–          Advance Directives
Advance directives are legal documents that allow you to control what medical decisions you would want made. They can provide comfort to your loved ones in times of great stress.

  • A Health Care Power of Attorney gives another person the right to handle your medical decisions should you be incapacitated.
  • A Living Will allows you to control what end of life decisions you would like to be made.
  • A HIPAA Release allows your partner access to your medical records. Without one, a doctor cannot release your information to a third party.
  • A Nomination of Guardian can name who you would like to serve as your guardian or as guardian for your minor children while you are incapacitated.

–          Preplan Funeral arrangements
No one likes to think about dying, but preplanning for your funeral can provide immense comfort to your loved ones and can give you peace of mind.

  • You can prepay your funeral and make arrangements ahead of time, to make things easier on your loved ones when the time comes.
  • You can designate your partner to handle your affairs so there are no family feuds over how the funeral will be handled.

–          Write a Will
Wills are very important for unmarried couples to provide for their partners. Without one, the partner has no rights to your property. Wills can;

  • Allow you to control who handles your estate, and can direct inheritance to your partner and children.
  • Be used as evidence to back up transfers that take place outside of probate, such as naming your partner as a beneficiary or joint owner.

–          Invest in Insurance
Life Insurance, Long term care insurance, and Medical Insurance are necessary for unmarried couples to make up for the lack of Government benefits.

  • Life insurance can pay off debts and replace lost income.
  • Consider a Life Insurance Trust to manage the payout of your insurance.
  • Long Term Care insurance can protect against draining your assets when long term medical attention is needed.

–          Save your money
Save money for the future in IRA’s and Savings accounts. Important things to remember when saving are;

  • Save heavily for retirement, because SS and pensions do not pay spousal support for unmarried couples.
  • Keep detailed records of who contributed to what account.
  • Make sure you specifically designate your beneficiaries.
  • IRAs can’t rollover to unmarried partners, but inherited IRA’s can be structured to achieve similar benefits.
  • Financial Powers of Attorney grant someone else the power to handle your finances. These can be drafted very broadly, or can be limited to a specific act.

–          Have a Domestic Partnership Agreement

Domestic Partnership Agreements are important for unmarried couples.

  • They can add structure and definition to a relationship, much like a prenuptial agreement or marriage contract.
  • Terms can be set out such as how property will be held within the relationship and how assets would be split if the relationship were to end.

–          Enact a Trust
Trusts can be powerful tools in estate planning.

  • Unlike Wills, trusts are not overseen by the court, so they are not public records and protect privacy.
  • Trusts should be paired with pour-over-wills.
  • Trusts can be used to provide financial support for partner’s, minor children, or relatives, without giving them full control of the money.
  • Trusts can help protect from outside creditors and law suits.

–          See an attorney
An attorney can;

  • Help identify what issues concern you.
  • Explain complicated issues to you.
  • Draft important documents.
  • Help you form a plan to accomplish your goals.

Comments are closed.