Basic Estate Planning Tips for Unmarried Cohabiting Couples

Estate planning should be carefully considered for any adult thinking about their future and legacy, married or not.

Many of the “default” estate planning laws were adopted in a time when cohabitation was less common. As a result, these laws often consider the interests of a surviving spouse but give no consideration to an unmarried partner.

This ignores the fact that cohabitating couples share many of the same concerns as married couples. There should be some basic estate planning for unmarried couples since they play a role similar to what the married couples play in their day-to-day lives.

For example –

If one partner dies, the other partner may be left with a mortgage, unpaid bills, or childcare costs. If they are unmarried, the surviving partner may have no rights to receive anything from the deceased partner.

This is in stark contrast to the result if they are married, where the laws are specifically designed to ensure that the surviving spouse is a beneficiary to help.

“My wife and I even sparked up the conversation before we were married, but didn’t know where to start. It’s one of the reasons we are thrilled to have started Trust & Will, bringing estate planning into the digital age, with a product that is easy and affordable to use.”

 Estate planning implications for unmarried cohabiting couples

Having these documents in place can help specify who can make financial and medical decisions on your behalf if you are incapacitated. Without a will, state laws will make the call, which may or may not reflect your final wishes.

Marriage provides each spouse with certain rights that an unmarried partner does not have.

Beyond the right to receive assets from an estate, these rights also include the right to make medical decisions, the right to receive medical updates and communicate with physicians, and the right to make decisions on final arrangements and burial instructions.

Unmarried cohabiting couples need to have estate planning documents in place to create these rights as they are not provided for under existing laws.

Estate planning for unmarried partners vs. married couples

Now the main points for discussion here are – how is estate planning different for married couples vs. unmarried couples? Are there types of estate plans that unmarried couples should consider? What are the estate planning must-haves for unmarried couples

It’s easy to assume that estate planning is only for married couples because they have spouses who rely on each other. If you’re single, you’ll want to have someone else to make financial and medical decisions on your behalf if they are not able to do so.

Same goes for your assets when you don’t have a clear set of beneficiaries (like a spouse or kids).

There can be some differences between those for married vs unmarried cohabiting couples, particularly at higher asset levels.

At its core, most of the objectives are the same –

1. You want to have a plan in place
2. Provide for the loved ones who survive you, and 
3. Make the process easier for them

These core objectives typically remain true for either married or unmarried couples.

There may be some other considerations, particularly with increasing asset levels.

Some types of trusts can let you specify how your assets are used. This is something commonly considered by individuals who want to make sure their assets are used for their partner and their kids and not diverted to the benefit of a later marriage or re-marriage.

From a tax perspective, there can be different estate and gift tax considerations for spouses vs. non-married partners, particularly with asset levels well north of $5,000,0000.

Estate planning tips for unmarried couples

Many of the key motivators for estate planning can exist regardless of marital status  – having children, owning a home or other sizeable assets, having loved ones you want to take care of.

Everyone should have a plan in place.

Either person can start the process and create their own plan. It doesn’t have to be something you both do at once. If one of you is motivated, take action. Maybe that will help motivate the other to do so as well.

 The laws do not protect unmarried cohabiting couples the same way they protect married couples.

This can also create a conflict in the law favoring someone other than the unmarried partner, potentially leading to disputes and litigation. It is all the more important to put a plan in place because you cannot rely on the law to do what you would want to happen.

It’s also important to make sure your plan is documented as an unmarried partner may not have the same ability as a spouse to carry out an undocumented plan.

A change in marital status is absolutely a time to revisit any existing plans.

Changes can affect the rights that each partner has. Those changes can also impact some existing beneficiary designations, including 401(k) plans. Even if you think everything is how you want it, getting married might override your designations and produce a different result.

Estate planning suggestions for unmarried cohabiting couples

There are some suggestions for unmarried couples on how to talk about estate planning.

It’s one of those ‘adulting’ conversations you don’t want to necessarily have out at a restaurant, but it is an essential conversation to have at home with proper context.

To have ‘the talk’ around joint bank accounts, life insurance, and of course, estate planning, it’s easy to think of it as some remote possibility that couldn’t possibly happen to you.

You don’t have to have one long talk to cover every detail at once. Just take it one piece at a time so it isn’t so overwhelming. Asking “would you want to stay on life support” or “do you want to be cremated” can be a great start and can be easier to wrap up if you start feeling overwhelmed.