Unmarried Couples: Cover Your Bases
Wisconsin Intestate Succession statutes state that when someone dies without a will, the deceased spouse or legal domestic partner is considered next of kin. After that, children receive priority as the next of kin to inherit the estate. If there is no spouse, or no children, the estate goes to the deceased’s parents, then siblings. However, Intestate Succession only follows bloodlines and legal relationships. If you want someone who isn’t legally related to you to inherit something, you’ll need to set it up.
According to the U.S. Census, in 2019, the number of unmarried partners living together in the U.S. had nearly tripled in two decades from 6 million to 17 million, representing 7% of the total adult population. If couples are not married and are not legal domestic partners (requires signing and filing a declaration of domestic partnership with the county registrar of deeds), they need to cover their bases if they want their partner to inherit their estate if they die.
The following checklist can help individuals and couples to start thinking about their estate, which includes financial assets, real estate assets, and all belongings. No matter how much or little people think their estate is worth, these steps will ensure a loved one is not left out of the picture if their partner were to pass.
The Basics: Beneficiary Status and Rights of Survivorship
A formal estate plan (that is, a pile of paperwork from a lawyer) is not needed to securely designate the beneficiary of financial assets. Individuals can add their partner’s name to financial assets including bank accounts, retirement accounts, investment accounts, annuities, and insurance plans.
Rights of survivorship means that if an asset is jointly owned, all ownership and/or funds pass directly to the surviving owner in the event of death. For real estate properties, make sure both names are on the deed with rights of survivorship. Double check all joint checking/savings accounts, credit cards, and any other asset where both names are listed have rights of survivorship.
It is important to note that many unmarried couples choose to keep their bank accounts and real estate investments separate. It is also important to understand that beneficiary status and rights of survivorship don’t cover belongings or the event that the couple perishes at the same time. This is where the comprehensive estate planning strategy comes into play.
The Strategy: Estate Planning for Life and Death
While the law only looks at bloodlines and legal partnerships in the absence of a will, any group of people can create an estate plan together. Many unmarried couples plan their estate together, so everything transfers over to the surviving partner automatically. If there are shared assets and dependents involved in the relationship (including pets), it is even more reason to make sure a couple’s living and non-living wishes are clearly stated.
An estate plan is a strategy, often including a collection of legal documents, that, if done correctly, lets individuals decide where their property goes and allows loved ones to avoid probate after they pass on. An estate plan typically includes:
1.Will – A legal document that gives instruction to the probate courts about your wishes regarding the care and distribution of your assets after your death. A will cannot reach out and grab things, it can only direct property that is already going through the courts.
2.Powers of Attorney – The medical and financial power of attorney documents inside of an estate plan ensures the person put in charge is able to make decisions should the individual become incapable of doing so.
3.Trusts – A crucial and diverse aspect of estate planning, trusts will protect an individual’s or couple’s legacy and ensure privacy and control of their wealth. The most frequent type of trust that is involved with estate planning and estate administration is a Revocable Trust (sometimes called a living trust or an inter vivos trust).
4.Advanced Directives – A legal document that tells doctors and loved ones an individual’s wishes about their health in the case they cannot communicate those decisions themselves.
Unmarried couples need to cover their bases when it comes to their estate so that their assets – and the future security of their loved one – are protected from probate, avoidable taxes, and legal contests from would-be heirs. Start today with a free consultation.