According to Pew Research Center in 2018, the median age of first marriage is at its highest point ever at 30 years for men and 28 years for women. The marriage rate has declined since 1990, particularly among the Millennial generation, who cite multiple factors for not getting married, including unable to afford a wedding, student loan debt, medical or credit card debt they don’t want to encumber on a spouse, taxes, or just not wanting to be married yet or at all. However, this conversely means that the number of Americans cohabitating with a partner has risen. In 2016, 7% of U.S. adults lived with a partner without being married, which is up by 29% from 2007.
This trend raises additional legal questions for these couples. Just like married couples, unmarried partners need to have discussions and make decisions on estate planning. It’s really not more complicated than estate planning for married spouses, but many unmarried couples neglect their estate planning simply because they’re unmarried and may not think about what would happen to their estate.
Assets and Beneficiaries
All adults have an estate of some kind. The estate does not have to be large, and the decedent doesn’t have to be “rich” for there to be an estate. The term “estate” simply means the assets and possessions owned by a particular person.
Often the assets include things such as savings and checking accounts, investment accounts, insurances, property and real estate, etc. Who would receive these items after you’re gone? If you’re married, your spouse is often the primary beneficiary. If you’re unmarried, would you want to name your partner as your primary beneficiary? If not, who would you name? A parent, sibling, or other family member? How about close friends? There are many options for you to consider, even if you are married.
If you do not have any estate plans or do not name beneficiaries, your estate then becomes intestate, which means it is handled by the courts according to succession laws in your state. In Maryland, the spouse inherits everything if there are no children and no surviving parents of the deceased. But if you have an unmarried partner? They may not qualify legally as your spouse.
Powers of Attorney
Who has the right to make medical decisions on your behalf if you become incapacitated? Who has the right to handle your finances, bank accounts, and pay bills? Who would be able to access your online accounts and close or otherwise manage said accounts?
It’s common for people to forget about these questions when considering the future. We don’t particularly enjoy thinking about our own mortality, but these questions are crucial to planning for your future. For unmarried couples, these questions become even more of a concern. For example, if one partner is hospitalized and cannot communicate for a prolonged period of time, someone needs to make decisions on their behalf.
Without valid powers of attorney or advance directives, and in the absence of a spouse, the right to make a decision may then be passed to the next qualified adult, such as an adult child or parent. In Maryland, the Health Care Decisions Act lists the following priority order:
“1) a guardian of the person, if one has been appointed; (2) the patient’s spouse or domestic partner; (3) an adult child of the patient; (4) a parent of the patient; (5) an adult brother or sister of the patient; or (6) a friend or other relative of the patient who briefly describes, in an affidavit, enough regular contact with the patient so as to make the surrogate familiar with the patient’s activities, health, and personal beliefs.”
In Maryland, the patient’s domestic partner is qualified to act as the primary surrogate decision maker; however, it’s wise to not leave this to chance or to have your decisions potentially questioned by family members who may disagree. Put your wishes in writing and name the people whom you would want to act on your behalf so there is no question on who has the right to act. In addition, if you want someone to act for you and they are out of order in the surrogate priority, you would absolutely need to name them in a legal document in order for them to have the authority to act before another family member; for example, if you want a sibling to act on your behalf before your parents have the authority.
Don’t Forget Insurances and Retirement Accounts
Please do not forget to update the beneficiaries paperwork on your life insurance and retirement accounts! We cannot stress this enough. There have been multiple legal cases in which a family member has challenged the insurance or retirement paperwork because the beneficiaries were never updated. For instance, if Robert listed his wife and children on his life insurance first, but then they divorced and Robert remarries but never updates his beneficiaries list, his second wife will not receive the life insurance distribution.
You must update this paperwork directly with the life insurance company and directly on your retirement accounts. This paperwork overrides any updated decisions made in your estate plans. Repeat: The beneficiaries list on your life insurance and retirement accounts is considered separate from your estate plans and if you make changes to your beneficiaries in your will or trust but not on your life insurance/retirement account, the previous paperwork listed in those accounts is still valid and will be distributed as listed.
For unmarried couples, you can name whomever you’d like as your beneficiary on these accounts. You can ensure that your partner will receive the life insurance benefit and/or retirement benefit by listing them as your primary beneficiary.