An increasing number of couples at various stages of life are choosing to live together without marrying, making estate planning a bit more challenging. This is true whether the couple is relatively young and has children or if they are seniors, according to a recent article from Kiplinger, “Estate Planning and the Legal Quirks of Retiree Cohabitation.”
From one perspective, living together without being legally married provides at least two major advantages: You have your own estate plan, so you may distribute assets after death with no obligation to leave anything to your partner or their biological children. In many jurisdictions, such as in Pennsylvania, you cannot disinherit a spouse. Of course, this does not apply if you’re cohabitating. Another advantage is that, if one partner needs skilled nursing, the assets of the other partner are not including in available resources as they would be if the couple was married.
However, there are downsides. For example, a surviving unmarried partner doesn’t benefit from inheriting assets without estate taxes. A non-spouse transferring assets may find themselves generating sizable estate or income taxes. To avoid this, your estate planning attorney will discuss tax liability strategies. The partner is also not next of kin, so it is very important to prepare proper Powers of Attorney appointing the partner in some capacity if you want the partner to be involved in your finances and, more importantly, your health care, if you need assistance.
Owning real property together can get complicated. Consider an unmarried couple buying a property solely in one person’s name, excluding the partner to sidestep any possible gift taxes. If the sole owner dies, the partner has no claim to the property. The solution could be planning for a right to reside in the property in your Will, possibly leaving the property outright to the partner or in trust for the partner’s use throughout their lifetime. It still has to be planned for in advance of incapacity or, of course, death.
Regarding healthcare communication and directives, special care must be taken to ensure that the couple can be involved in each other’s care and decision-making. By law, decision-making might default to the married spouse or kin. Without being designated as a health care surrogate or agent, a cohabitating partner has no legal authority to obtain medical information, make medical decisions, or, in some cases, won’t even have the ability to have access to a hospitalized partner. A healthcare power of attorney is essential for unmarried couples.
For senior couples living together, blending families can be challenging. However, blending finances can be even more complex. Living together later in life can create many concerns if there are former spouses or children from a prior relationship. If a senior decides to marry, they are advised to have a prenuptial agreement so children from previous unions are not disinherited. If a potential spouse has big issues signing such a document, it should raise a red flag to their motivation to marry. Before making such a decision as to marry, an elder law attorney, such as Sean D. Curran, Esquire, in Reading, Pennsylvania, should be consulted.
While living together without the legal protection of marriage is an individual decision and may be seen as a means of avoiding legalities, it needs to be examined from the perspective of estate planning to protect both parties and their families. Couples must prepare for the future, for better or worse, in sickness and health.
Reference: Kiplinger (Dec. 6, 2023) “Estate Planning and the Legal Quirks of Retiree Cohabitation”
Free E-Newsletter – Subscribe Now
