Creating an estate planning becomes increasingly important as we move through adulthood. No matter your situation, you need to begin preparing for the future, even if you’re not married to your significant other. Why? Without a plan in place, if either of you were to pass away or fall ill, neither would inherit anything nor have a say in how each other receives end-of-life care.
California law does not by default provide any right to inherit from a significant other unless a legal marriage has occurred. If you’re not married, it’s very important you set up your own plan as California’s default plan will not likely match your intentions. Creating an estate plan should be your top priority. Here are four things our San Diego estate planning attorneys recommend you need to consider as you navigate the entire process:
Consideration #1 – Assets That You Both Own
You and your partner have likely obtained a few expensive items together, such as a home or vehicles, but it’s not a given that those assets will naturally pass to the other by default. However, creating an estate plan ensures that when one of you passes away, the other assumes 100% ownership of any valuable property if that is your wish. One way you can accomplish this is by establishing a right of survivorship for joint tenants. In many cases it may make sense to create “mirror trusts” so that you can collectively agree what will happen at the passing each partner. These are simple revocable living trusts, but they are designed to mirror one another to mimic the feel of a married couple’s estate plan and maximize tax savings.
Consideration #2 – Beneficiary Designations
You and your significant other also likely have heirs and beneficiaries who’ll receive property from your estates. You both probably have a list of assets – bank accounts, retirement funds, investments, private equity, etc. – that you want to pass along. It’s advised that you decide who’ll inherit your assets and determine how much they’ll inherit.
Beneficiary designations are an aspect of the estate planning process that’s stress-free and easy to perform. Remember, you can always make changes regarding who receives your assets. The other partner is named as the primary beneficiary with many unmarried couple, or the mirror trust in cases where two trusts are used to plan. Between beneficiary designations and your trusts, you can have absolute control over who is to inherit what, without having to worry about generic Probate law in California.
Consideration #3 – Powers of Attorney (POA)
POAs grant authority to make important financial and medical decisions on someone else’s behalf. When you create a POA for finances, you effectively grant someone power to manage your assets – they can sign your name on anything you could sign, but it must be for your benefit. With POAs for healthcare, you allow someone to determine how you receive medical treatment and you give guidance on your healthcare wishes.
Two primary types of POAs exist: Springing and Immediate Powers of Attorney. An immediate POA goes into effect immediately upon creating and signing the document, and usually endures through any period of incapacity. Springing POAs, on the other hand, aren’t valid until the person creating the document becomes mentally incapacitated. In all cases, POAs end upon the passing of the individual who created the power.
Estate planning for an unmarried couple often requires POAs for several reasons. Without one, neither of you will have a say on important medical or financial decisions for the other. Because your partner knows intimate details about your finances and health, it’s probably better that they have special authority in the matter.
Consideration #4 – Avoiding Probate
Probate is the process of settling someone’s estate by overseeing and distributing assets. It’s something that many people avoid because it’s time-consuming, unnecessarily expensive, and often causes conflict among surviving family members. Probate can also be tricky, depending on the debts and assets you leave behind.
The good news is that you and your partner have options that make it easier to transfer assets when one of you passes away. For example, the mentioned living trust option above ensures that your partner can automatically inherit specified property without going through the burdensome Probate process. Probate often complicates the process of determining what everyone inherits, and in general you want to avoid it at all costs in California.
An Estate Planning Attorney Can Help Sort Things Out
Here at Jenkins & Jenkins, we handle estate planning for unmarried couples throughout San Diego and all of California. We can offer solutions for managing your assets and protecting your loved ones. We always ensure that estate planning for an unmarried couple is systematic and hassle-free! Reach out today to schedule your appointment.
