Protect Your Partner With Estate Planning Documents
If you have a live in partner, you may want to leave your home to that person when you die. However, unless you execute a valid will or revocable living trust, or take other legal steps to protect your partner, he or she could be forced to vacate your home when you die. If you do not have a financial power of attorney, your partner may be unable to pay bills, run your business or manage your affairs if you become disabled.
Another painful thing many unmarried partners face in times of tragedy is being unauthorized to handle their partner’s medical decisions and final arrangements. Unless you have executed a durable health care power of attorney, your partner will not be able to review your medical records or tell your physician your preferences regarding treatment. If you have not taken steps to authorize your partner to handle your funeral and other final arrangements, your legal next of kin will control the disposition of your remains.
Executing the right agreements and other documents is especially important if you are part of an unmarried or same sex couple because in most states, the law simply does not provide the protection or rights you might want for each other. If you live in a state that recognizes civil unions or registered domestic partnerships, the laws of your state may make certain legal rights and benefits available to your partner, but only if you comply with the applicable requirements of registering your domestic partnership or formalizing your civil union. Consider how the person you share your life with would be treated if something happened to you.
What is a Domestic Partnership Agreement?
A domestic partnership agreement is a written agreement in which two individuals agree to be responsible for each other’s welfare and basic living expenses during the domestic partnership. In states that recognize domestic partnerships, a domestic partnership agreement or registration provides many of the same legal rights and benefits as marriage. At this time, many states do not recognize domestic partnerships. A domestic partnership agreement only confers rights and benefits to the extent such rights and benefits are recognized under the laws of the state where the domestic partners are domiciled.
Does a Domestic Partnership Allow My Partner to Inherit My Estate?
In those states that recognize domestic partnerships, a valid domestic partnership may confer some of the same rights of married spouses, including inheritance rights if the partner dies intestate. While a domestic partnership agreement may provide certain property and inheritance benefits, it is not a substitute for a will and other estate planning documents such as a power of attorney, health care directive, living trust, and pet trust. Also, domestic partnerships do not receive the same federal estate tax advantages as married couples. Therefore, developing a thorough estate plan with help from a tax professional or estate planning attorney is essential. For more information on state intestate succession laws, civil unions, and domestic partnerships, see our page on the Partner's Share.
Important Facts About Domestic Partnerships
In jurisdictions that recognize domestic partnerships, registration of a domestic partnership or the filing of a domestic partnership agreement with your state may be a prerequisite to receiving any legal rights under the partnership. You may also have to complete a domestic partnership affidavit or other paperwork with your employer to qualify for health insurance, retirement plan or other employee benefits.
A same-sex partner is not entitled to pension benefits upon the death of his or her partner unless the partner’s employer has made some provision for same-sex partners in their pension plan and the employee has complied with all paperwork requirements for such benefits to be provided to his or her partner.
Under current federal law, a same-sex partner is not permitted to roll over retirement plan benefits into his or her own IRA or other retirement plan account and keep the proceeds tax deferred. The federal government generally does not recognize domestic partnerships. This may have significant financial ramifications for you and your partner on matters such as social security, military pensions, and other government benefits.
Even if your state recognizes domestic partnerships, it may not recognize them for purposes of state income tax or state estate tax laws. Also, federal estate tax laws currently do not recognize domestic partnerships. Therefore, it is important to work with a CPA or other tax professional when preparing an estate plan as domestic partners.
When You Move to Another State
If you register a domestic partnership in one state and move to another state, your domestic partnership may not be recognized in your new state. Even if you move to a state that recognizes domestic partnerships, your partnership may not be valid there unless you comply with that state’s registration requirements. Before moving, check the laws of the state where you are planning to relocate.
How to Create More Financial Security for Your Partner
If you have a domestic partner, there are many things you can do to increase your partner's financial security. When you make an estate plan and give your partner authority under that plan, it creates more financial security for your partner. There are also other steps you can take, such as buying a life insurance policy and changing how you hold title to property, that will make life much easier for your partner if something happens to you.
Community Property States and Domestic Partners
If you live in a community property state and are in a domestic partnership, property you acquire during the partnership may be treated as community property. When planning the distribution of your estate, it is important to understand what property will be treated as community property and what property will be treated as separate property.
10 Estate Planning Problems of Unmarried Couples
If you are part of an unmarried couple and do not have a valid domestic partnership recognized by your state, you could face many serious issues regarding your children, pets, money, property, health care, and estate, including:
(1) Losing your home after your partner’s death if your name is not on the title to property or lease;
(2) Losing custody of your children if you are not listed as their legal parent, have not formally adopted them, and have no other legal parental rights;
(3) Losing your pets after your partner’s death if the pets were owned by your partner and he or she dies without a will or pet trust leaving the pets to you;
(4) Being unable to visit your partner in a hospital or make medical decisions for your partner if your partner has not named you his or her agent for health care in a power of attorney or made a living will;
(5) Being unable to manage your partner’s financial affairs if he or she becomes disabled or incapacitated and has not made a financial power of attorney;
(6) Being unable to share an assisted living apartment or nursing home room with your partner;
(7) Losing income, government benefits, health insurance, retirement benefits, and investments after your partner’s death;
(8) Paying higher federal estate taxes because there is no marital deduction for unmarried couples and losing tax-deferred benefits on retirement accounts because they cannot be rolled over by the unmarried partner;
(9) Being unauthorized to serve as administrator or personal representative of your partner’s estate if he or she fails to make a will naming you as executor; and
(10) Being unauthorized to serve as conservator or guardian of your partner if he or she becomes unable to manage his or her affairs if your partner fails to name you as agent in a power of attorney for finances.
Benefits of Domestic Partnerships
In states which recognize them, domestic partnerships can give an unmarried couple many of the same rights as married couples. If you have a registered domestic partnership in a state that recognizes them, your domestic partner may be able to:
Retain custody of children born or adopted during the domestic partnership;
Receive health insurance, retirement plan or pension plan benefits;
Visit you in the hospital;
Obtain medical information from your physician;
Make medical decisions for you if you become incapacitated or unable to communicate;
Be named your guardian or conservator if you are unable to manage your affairs or take care of yourself;
Be named personal representative or administrator of your estate if you die intestate;
Make funeral and burial arrangements after your death;
Authorize an autopsy after your death;
Authorize an organ or tissue donation after your death;
Be named on your death certificate;and
File an injury, loss of consortium or wrongful death lawsuit arising from your injury or death.
Even if you live in a state that recognizes domestic partnerships, the laws of your state may not provide all the rights and benefits outlined above. The laws on domestic partnership vary by state.
Just as there are advantages to a domestic partnership, there may be disadvantages in some situations. Because this is a complex area of law and many states do not recognize domestic partnerships, if you are part of an unmarried or same sex couple, consult an attorney licensed in your state regarding the best estate planning strategy for you.
For Unmarried Couples with Children
In states where domestic partnerships are recognized, children born or adopted during the partnership may be presumed to be the legal children of both partners. In these states, children of a registered domestic partnership also generally have the same intestate succession or inheritance rights as children of a married couple. In addition, domestic partners may inherit from the children of their partnership under intestacy laws. Despite the rights regarding parentage usually afforded to domestic partners in states that recognize such partnerships, lawyers often recommend domestic partners complete a second parent adoption to solidify the parental rights of both partners.
The laws regarding inheritance and probate often treat the children of unmarried couples harshly. For information on children born out of wedlock and the right to inherit, visit our page on Non-Marital Children.
Requirements for a Domestic Partnership
The requirements for a domestic partnership vary according to applicable state laws. Typical requirements for a domestic partnership include:
Both partners share a common residence;
Both partners are at least 18 years of age;
Neither partner is married to another person and is not a party to a domestic partnership agreement with another person;
Both partners are of sound mind and have capacity to enter such an agreement;
The partners are not related by blood; and
The partners are both the same sex or at least one of the partners is 62 years of age or older.
Why Domestic Partners Need a Power of Attorney
If you become disabled or incapacitated, your domestic partner may not have the legal right to take certain actions on your behalf. In some situations, the law may give such rights to a relative or family member rather than your domestic partner. There are steps you can take to increase the rights your domestic partner would otherwise have. One of those steps is creating a Durable Power of Attorney.
A Durable Power of Attorney for Finances is inexpensive to create and execute. If you want to ensure your domestic partner has the right to manage your finances and property, rather than a blood relative or state appointed representative being involved, a Durable Power of Attorney may be a good option.