THE BLOG
09/10/2015 12:32 pm ET Updated Sep 10, 2016

Estate Planning for Unmarried Couples

It is remarkable to note that there are growing numbers of Americans who have decided not to marry*. People are marrying at a later age and sometimes not at all. Older Americans who have been widowed or previously divorced are deciding to cohabitate instead of marrying. Even same sex couples that can legally marry may decide it's just not for them.

While these choices are all valid it is important to know what rights you are giving up when you choose not to marry. For example, legally married couples are allowed to leave their entire estate to the surviving spouse estate tax free. Everyone else is subject to pay tax on amounts over the exclusion amount (which in 2015 is $5.43 million).

Additional benefits provided to married couples include, Social Security, immigration status, the right to decline to testify against a spouse, joint bankruptcy filing and protection of spousal obligations, surviving spouse benefits, benefits under victim's compensation funds (i.e. 9/11 victims funds), hospital visits, and, of course, inheritance benefits.

In California where I practice, there is no common law marriage, so regardless of how long a couple has lived together, the Probate Court will not recognize the relationship as a legal one. So without additional planning, if one person dies, the survivor is not entitled to any benefits, notice in a probate proceeding or continuing support that is afforded to legally married spouses.

To illustrate this point, let's take the case of an unmarried older couple that has been together for many years. She sells her house, moves into his, pays toward expenses and the mortgage, and takes care of him for his final years. His family visits occasionally. After years of living together, he dies with no estate planning. His family files to open a probate and gives her 30 days to move out, as she has no legal right to stay.

It's more unfortunate for younger couples that are committed. Let's say neither is close to their family. The couple is in a horrible car accident and she is in intensive care and non-responsive. Not only is he not allowed to see her, her family arrives and starts making decisions about her healthcare that he knows she wouldn't want. But he has no legal rights and the family shuts him out. To add insult to injury, she dies and her family is entitled to any assets that do not have a beneficiary named.

Fortunately, much of this can be addressed with some legal documents that allow you to express your desires before these times of crisis come.

Generally in California, if you own real property or have assets over $150,000, you should establish a Revocable Living Trust, which will allow you to avoid probate after you die, and distribute your assets to whomever you choose. It gives you the most flexibility to name who you want to manage your assets if you are incapacitated or when you die, and how you would like your estate distributed. If your assets total less than $150,000, a will may be sufficient to accomplish your estate planning goals.

In addition executing a power of attorney and advance healthcare directive enable you to appoint a person to act as your agent for financial and health care decisions if you are not able. They are legal documents and will be honored by institutions and the Probate Court when necessary.

We live in an amazing time in which individuals are defining what it means to be a family. As you take charge of your life in this way, know the costs and benefits of your choices and do appropriate planning around them.

*Cohabitation has rapidly expanded in recent decades, led primarily by changes in young adults living arrangements." America's Families and Living Arrangements: 2012, U.S. Census Bureau

Alexandra Smyser is an Associate Attorney at the Law Offices of Donald P. Schweitzer in Pasadena, CA. She handles all areas of Estate Planning including trusts, wills, probates, general and limited conservatorships, and special needs trusts. For more information on estate planning contact Ms. Smyser at (626) 683-8113 or visit http://www.pasadenalawoffice.com.