Broker Check

Retirement and Estate Planning for Unmarried Couples

May 03, 2024

In a world where relationships take various forms, traditional marriage is no longer the only path for committed couples to take. In this section, we discuss the landscape of retirement and estate planning for unmarried couples.

The concept of marriage has evolved, with more couples choosing to forgo formal ceremonies or legal unions in favor of other relationship structures. The number of unmarried couples living together has steadily increased, reflecting a change in social norms and attitudes towards marriage. Fewer people are choosing to get married, and the average age of marriage has risen. 

Common Law Marriage May Not Make a Difference

In some states, couples who live together for an extended period may be considered common-law married, entitling them to certain legal rights and protections similar to those of legally married couples. However, common-law marriage laws vary by state; not all states recognize common-law marriages. Furthermore, common-law marriage may not confer the same benefits and protections as legal marriage. 

Retirement and Estate Planning Challenges for Unmarried Couples

Inheritance

Unmarried partners may not have automatic inheritance rights if one partner passes away without a will. With proper estate planning, assets may be distributed according to their wishes.

Healthcare Decision-Making 

Unmarried partners may not have the legal authority to make medical decisions on behalf of their partner in the event of incapacity. This can complicate healthcare planning and end-of-life care.

Retirement Benefits 

Unmarried partners may not be eligible for spousal benefits such as Social Security survivor benefits or employer-sponsored retirement benefits. This can impact their financial security in retirement.

Benefits That Are Not Available for Unmarried Couples 

Tax Benefits

Married couples may qualify for tax advantages such as the marriage tax deduction and the ability to file joint tax returns, resulting in lower overall tax liabilities. 

Social Security Benefits 

Spousal and survivor benefits under Social Security are reserved for legally married couples. Unmarried partners may not be eligible for these benefits, even if they have been in a committed relationship for many years. 

Steps Unmarried Couples Should Take 

Create a Will 

 Draft a will to outline your wishes to distribute your assets and appoint an executor to manage your estate. This can help ensure that your partner is provided for in the event of your passing.

Establish Power of Attorney 

Designate your partner as your healthcare proxy and financial power of attorney to make medical and financial decisions on your behalf if you become incapacitated. 

Consider Joint Accounts

Open joint bank accounts or investment accounts to facilitate shared financial responsibilities and ensure both partners can access funds if needed. 

Review Beneficiary Designations 

Review and update beneficiary designations on retirement accounts, life insurance policies, and other assets to ensure your partner is designated as the beneficiary if desired.

Consult with Professionals 

Seek guidance from legal and financial professionals specializing in estate and retirement planning for unmarried couples. They can help you navigate the complexities of the law and develop a customized plan that meets your needs and goals. 

Conclusion 

While unmarried couples may face unique challenges in retirement and estate planning, they have the power to take control of their financial futures and protect their interests. By discussing their goals, exploring their options, and taking proactive steps to plan for the future, unmarried couples can build a solid foundation for a secure and fulfilling life together.

Ready to Schedule a Meeting?

Click here or the photo below to schedule an in-person, virtual, or phone call meeting.

We look forward to working with you!