Estate planning is the management of assets and their respective designation when someone passes away. Married couples will have specific rights to each other’s assets, and in the absence of legal impediments, the surviving spouse can become the trustee.
Like married couples, unmarried couples can also get involved in estate planning. The difference is that, without a will, they cannot automatically inherit assets from one another, and freely make medical-related decisions for each other as well.
If you and your partner are considering estate planning, here are tips to help you start.
1. Include Your Partner In Your Will
You can create a last will that expressly enumerates your partner or other individuals as your beneficiaries. A will can be changed or revoked anytime you wish during your lifetime. Without a will, your assets become subject to intestacy. Intestacy law automatically grants assets to the surviving spouse, children, then to extended family members. Your partner is not entitled to a portion of your assets without a will since there’s no civil union between the two of you.
Let’s say that you want your partner to own the house that you both worked hard for. You can place your house in a living trust stating that your surviving partner can get the house or live in it as long as they want.
A joint tenancy can also help avoid probate proceedings that involve naming multiple owners of the house. At the passing of one owner, the house goes to the surviving titleholder. But it comes with complexity, especially if the house is on a mortgage. You can seek professional advice from an attorney to help you if you choose joint tenancy.
2. Prepare For Sickness And Incapacity
Either one of you can fall ill unexpectedly, and there’s no certainty when you’ll get better and continue with your estate planning. Talking to an estate lawyer, such as attorneys from https://www.milehighestateplanning.com/, can assist you in protecting your assets and keeping your property safe.
A power of attorney (POA) allows unmarried partners to make end-of-life medical decisions that are as a general rule, a vested right for married couples. The durable power of attorney also allows unmarried couples to have control over each other’s financial affairs.
Without the document, they fall under the intestacy law. A blood-relative will take over the assets such as real estate, financial-related and medical-related aspects of the estate. If there are no family members, the probate court will appoint a guardian in their stead, which can complicate matters if you don’t want a stranger making decisions on your affairs and possessions.
3. Designate Your Partner As A Payable-On-Death Beneficiary
If you have a bank account, insurance policies, and IRAs, or a 401(k), you can name your partner as a beneficiary. It helps avoid probate court and overrides the will and trust. Your bank or credit union can convert your accounts to payable-on-death (POD) accounts.
This means your savings and checking accounts, savings bonds, security deposits, and financial certificates can be transferred to whomever you choose as a beneficiary, including your partner. The surviving partner will only need to present their identification and the institution’s death certificate that will transfer your accounts to the named beneficiary.
There are drawbacks to POD:
- There are instances when the named beneficiary passes away before you can automatically transfer your accounts to an estate. It will serve you well to name multiple beneficiaries to offset this disadvantage.
- Multiple beneficiaries can complicate the distribution of accounts, so they need to compromise and negotiate to prevent disputes.
- POD accounts can make it difficult for the named executor to pay off loans and taxes. You can discuss with your attorney the most effective methods to proceed.
4. Explore Digital Estate Planning
Digital assets don’t only include your photos, videos, and documents. If, as partners, you’re also investing digitally and managing financial accounts through software, you need to make a list and organize them accordingly, starting with login details.
Estate planning used to rely on paper documentation alone. Special documents such as a will, trust, power of attorney, insurance policies, and others are typically filed away in a folder. Nowadays, you can digitize your account, and if you’re managing financials online, you need to mention that to your lawyer for the future settlement of your estate.
You can take the following steps on digital estate planning:
- Create a list of digital assets and how to access them. These are the information stored on your desktop or laptop computer, hard drives and flash drives, tablets, smartphones, and other digital devices. Include various accounts, including social media, gaming, as well as websites, domain names, and intellectual properties under your management.
- Specify the designation of each digital asset. You can pass them on to your partner, immediate family, or close friends. You can archive some of them or have the rest deleted. Make sure to identify the ones with monetary value and let someone you trust handle them.
- Name a digital executor. This person should not only be someone you trust, but someone who has basic technical knowledge. While naming a digital executor is not legally binding, you’d still want to have someone manage your digital properties. Name your digital executor in the will and specify the digital asset’s file location so that the executor can access the same when necessary.
- Store digital information in a reputable and secure online storage service with a good track record. Digital asset protection also includes ensuring that your digital storage is durable and secure. Choose the proper storage devices in terms of brand, capacity, and interface.
Alternatively, you can create a paper document instead of naming all of your digital accounts, login details, and devices for traditional filing. Nevertheless, it should be in the presence of your attorney. Inform your attorney, partner, or other people your trust about your digital assets—be extra cautious and limit the number of people who know about these assets.
Asset management is not just for married couples. Nowadays, unmarried partners can live together and decide to formalize their union later on while planning their financial future. These tips aim to help unmarried couples protect their rights and accumulated properties. It’s better to start planning now to save yourselves the trouble in the future.