I often consult with unmarried couples who are deeply committed to each other yet have made the decision not to marry now – or perhaps never to marry. If you are part of an unmarried couple, estate planning takes on heightened importance for you because the reality is that the law continues to grant benefits and rights on the legally married it does not to unmarried couples. Fortunately, careful estate planning can accomplish what the law does not. It’s not hard to get this right, but the gap between good planning and no planning is much bigger for unmarried couples than for married couples.
There are a number of legal documents which are particularly important in ensuring that unmarried couples enjoy the same secure outcomes that married couples do. Among them are Power of Attorney, Revocable Living Trusts, Health Care Powers of Attorney, and HIPAA Waivers, as well as paying some close attention to issues relating to the ownership of real property.
Marriage Is No Longer the Norm
Not all that long ago it was almost unheard of for two unmarried people of the opposite sex to live together for an extended period of time. In fact, according to figures released by the U.S. Census tell us that in 1968 only 0.1 percent of 18- to 24-year-olds and 0.2 percent of 25- to 34-year-olds lived with an unmarried partner, according to the Current Population Survey. Those same figures show that 50 years later, in 2018, almost 10 percent of 18- to 24-year-olds cohabitated and 15 percent of 25- to 34-year-olds lived with an unmarried partner. The law sometimes changes slower than society though which is one reason why you should have a comprehensive estate plan in place if you are cohabitating.
Bridging the Gap in Planning!
To level the playing field for unmarried couples, a comprehensive estate plan is crucial. If you want your partner to be the person to take care of your property and legal affairs in the event of your incapacity you will want to use a durable power of attorney and a revocable trust agreement. A trust is a fiduciary legal arrangement that allows a third party, referred to as a Trustee, to hold assets on behalf of a beneficiary or beneficiaries. The person who creates a trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Trustor transfers property to a Trustee, appointed by the Trustor. The Trustee holds that property for the trust’s beneficiaries as well as invests trust assets and administers the trust terms according to the terms created by the Trustor.
During your life, you are the Trustor, Trustee and Beneficiary of a Trust like this. You may want your partner to also be a beneficiary. You may also want your partner to be a Co-Trustee and will very likely what them to be your Successor Trustee, to manage things when you are no longer able to serve due to incapacity or death.
A Durable Power of Attorney appoints an agent — most likely the same person as your Successor Trustee — who performs many of the same tasks, managing assets which are not part of the Trust in the event of your incapacity. Without a Power of Attorney (and Health Care Power of Attorney), you are at increased risk for someone asserting the need for a guardianship in the event of your incapacity. Where you are your partner are unmarried, this increases the risk that someone other than your partner might end up managing your property and affairs, which may not be your wish and may not be in the best interests of your partner.
A Health Care Power of Attorney is, in North Carolina, typically a separate document from your Durable Power of Attorney, and names a person (usually also naming backups) to make health care decisions for you when you cannot. Again, this may be critical if you want to ensure that an unmarried partner is not only at the table, but at the head of the table when it comes to working with your health care providers in the event of your incapacity.
Another value of having the necessary documents is that you can specify who you would want to serve as a guardian for you should one ever be necessary.
A revocable living trust can help ensure that your partner inherits from your estate. If you were to die without a Will or a trust in place, you would leave behind an “intestate” estate. When that happens, the state intestate succession laws determine what happens to your estate assets, and in North Carolina, as in most states, your unmarried partner is not included. Because you are not legally married, your partner would receive nothing from your estate – no matter how long you have been together. He/she would not even be entitled to sentimental personal property that you would undoubtedly want him/her to have. While a Last Will and Testament could resolve this problem, using a revocable living trust can as well while also offering additional benefits, such as:
- Incapacity planning — if you were to become incapacitated tomorrow, someone would have to take over control of your assets and make certain decisions for you. You might want that person to be your partner; however, the law would not favor appointing him/her should it become necessary for a judge to decide. Creating a revocable living trust that appoints you as the Trustee and your partner as the successor Trustee can help resolve this dilemma. Major assets are transferred into the trust and if you become incapacitated, your partner takes over as the Trustee, giving him/her control over those assets without the need to seek judicial approval.
- Probate avoidance – using a revocable living trust also allows assets held in the trust to bypass the probate process. Not only does that significantly decrease the likelihood of litigation, but it also increases the odds of your partner actually having access to much-needed assets shortly after your death instead of having to wait until the end of the probate process.
Contact a Durham, Chapel Hill, and Raleigh area Trust Attorney
If you have additional questions or concerns about how a revocable living trust might fit into your estate plan, please contact the Chapel Hill, Raleigh, Durham estate planning attorneys at Clarity Legal Group by calling us at 919-484-0012 or contact us online.
- Why Liquidity Is Important Within Your Estate Plan - May 15, 2023
- What Is the Medicaid “Spend Down” Requirement? - March 20, 2023
- If I’m the Trustee Do I Need an Attorney to Help? - February 25, 2023
