Marriage or No Marriage

Privacy Book by Jay Lashlee and Private Trust Book

Significant Others

Estate Planning for Unmarried Couples

According to a USA TODAY article, Census Bureau statistics show that the number of unmarried couples who are living together continues to rise. Some demographers blame the poor job market and the bad economy, while others say that the societal stigma once attached to living together prior to marriage is no longer relevant.

Because the law does not bestow the same ownership benefits on those in long-term relationships as those who are married, unmarried couples need to protect themselves, especially if property is involved.

Potential Problems

Estate planning for unmarried couples is especially important. If a surviving partner inherits real estate, savings and retirement accounts, this could easily become a legal nightmare, and be lost to the significant other. They may be forced to sell the home, or negotiate with close relatives for their own property. To prevent this and to take advantage of estate planning strategies and to protect an estate from taxes, couples should consult with an estate planner and create protective trusts.

Alternatives

If you and your partner own a house together, joint tenancy may be adequate, but a trust is much better as a form of legal co-ownership that ensures the property passes to one partner as a survivor benefit without requiring the property to go through probate. Unmarried couples can also draw up a trust or contract that specifies how the property will be handled in case of a breakup.

Benefits of Marriage

IRA Plans

A larger IRA. To be eligible to contribute to an IRA, you must have taxable income. However, if you are married and do not have taxable income, the spouse who does work is allowed to make an IRA contribution on behalf of his or her nonworking spouse.

Healthcare Coverage

Having one spouse covered by the other spouse’s employee health plan can save thousands of dollars every year.

Social Security

Social Security benefits. A husband or wife is entitled to one-half of each others' Social Security benefits as well as to death benefits.

Inheritance Rights

Automatic inheritance rights. If a spouse dies without a will in California, the surviving spouse has a legal right to all their community property as well as a portion of any separate property, depending upon the number and relationship of additional survivors.

No Estate Tax

You can leave an unlimited amount to a spouse without generating any estate tax.

No Gift Tax

Current law allows exempts spouses from having to pay any taxes on gifts to each other.

Special Trusts

There are some types of life estate trusts that are restricted to married couples, including marital deduction trusts, QTIP trusts and qualified domestic trusts (QDOT).

Marriage Problems

There are some legal problems with marriage right away. Both "partners", now become merged as one "person". That means only one credit report, one borrower, one owner of debt, one that owes taxes, and INCLUDES all existing and future debt. Some couples forgo legal marriage, or try to keep separate identities, but hard work and good luck may not provide an adequate solution.

Avoid the Problems

There are many ways of using Private Asset Trusts to avoid the merging consequences. Review these with your estate planner at the earliest moment possible to prevent problems.

The Private Asset Trust

Our Private Asset Trust includes the best benefits, allows you to select special benefits, and has the most flexibility. Phone us or email us to discuss success strategies.