Saying "I don't?" How unmarried partners can protect their finances

Some people are saying “I don’t.” They don’t want the government involved in their relationship, or they believe the institution of marriage is archaic. Some want to avoid the hassle and expense of a potential divorce, while others on the Supplemental Security Income (SSI) program may not be able to afford to get married due to the potential loss or reduction in benefits. 

According to Census data, as of 2021 11.6% of households were opposite-sex unmarried partners, the second largest share next to their married counterparts. While this population continues to grow as attitudes shift, those opting for long-term partnerships without legal marriage can leave themselves vulnerable. 

“Marriage gives spouses the benefit of many legal presumptions and protections with regards to each other’s property and affairs. An unmarried partner, on the other hand, is at a much worse position than even an estranged child or sibling in a situation where the other partner has died or has become incapacitated,” said Joseph Fresard, elder law attorney at Simasko Law in Mount Clements, Michigan. 

When you’re young and healthy, you might not think of the types of additional protections you need as unmarried partners. But not putting things into place can lead to devastating consequences that can be tough to bounce back from. 

“I’ve had cases where the couple was together for over twenty years, cohabitating, referring to each other as husband and wife, but this meant very little when one partner needed a guardian and then passed away. The other partner had no say in these legal proceedings, as they had no legal relationship,” said Fresard. 

So what can you do? You don’t need to walk down the aisle, but you do need to be proactive about your estate planning and make sure your finances are protected as unmarried partners. In lieu of a legal marriage, you’ll need to get your documents in order so you have similar rights and protections. 

“In order to prevent this, an unmarried couple needs to sign Power of Attorney documents, a Patient Advocate, and a will, at minimum, to establish that their partner should be the one to act on their behalf in the event of their incapacity or death, and that the partner should inherit their property,” said Fresard. 

Here’s a checklist of things to do to protect your finances as unmarried partners. 

1. Name your beneficiary 

Let’s start with one of the easier things to do — name your beneficiary on your financial accounts. When you name a beneficiary, you’re saying that you give legal approval for that person to inherit the assets of the specific account. You can typically name a beneficiary for:

• Bank accounts
• Retirement accounts
• Investments accounts
• Life insurance policies 

For your bank account, you may be able to have a Payable on Death (POD) designation and with your investment accounts a Transfer on Death (TOD) designation. The most appealing part about this is that with these designations you can circumvent the often lengthy and cumbersome probate process. 

According to the American Bar Association (ABA), “Probate is the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries.” 

The probate process varies in length, depending on many different factors. But in general, it could take a minimum of six months and up to one year or more. 

2. Make a will 

If you’re not married, you have less control over how your assets and property are distributed after your death. Without a will in place, what happens next is subject to your state laws and may be out of alignment with what you really want. 

Creating a will is your way to get back into the driver’s seat, so you know when you’re gone from this mortal plane that your wishes are being carried out how you want them to be. To make a will, list out your assets and who you want to receive them. Unmarried partners aren’t necessarily the default, so if you want them to be, naming them here is crucial. 

You will also need to name an executor of your estate. If you have children, you’ll also want to include a guardian if both you and your partner pass away. To finalize the will, you can use an online service like Trust & Will or hire an estate planning lawyer. You can also see if there are resources provided in your state. For example, the state of California has the California Statutory Will Form. Additionally, look at state-specific requirements for a valid will. 

3. Power of attorney

If you want your partner to be the go-to person to make decisions on your behalf if you’re unable to, you need to create a durable power of attorney (POA). Having a “durable” power of attorney stays in effect if you’re incapacitated up until your death. On the other hand, if you get a “general” power of attorney that only remains in effect while you’re mentally sound. 

A POA is a legal document and can be financial or medical. A financial power of attorney allows someone to manage your finances if you’re incapacitated. A medical power of attorney gives power to someone else to help manage medical decisions on your behalf. You can name your health care proxy who can do this through a durable power of attorney. Get the forms from your state and look over the requirements to get started. 

4. Patient advocate

In addition to a medical power of attorney, you may also want your partner to be a patient advocate. In this situation, the patient advocate takes on a supporting role to help you manage and navigate the complex healthcare system. 

Sometimes this means asking questions on your behalf or obtaining necessary information. To put this in place, your partner will need to sign and accept the role of patient advocate. 

5. Understand property rights 

If you own a house with your partner or are thinking of buying one, it’s critical to be aware of how property transfer works. Married couples typically have property ownership transferred to the surviving spouse after the other one’s death.  

“For unmarried couples, this does not automatically exist, they are considered 'tenants in common' with a 50-50% ownership stake. If a partner in the relationship dies, 50% of the ownership of the property will pass to the deceased partner’s descendants,” said David Akrami, an attorney and owner of Akrami PLLC, a full-service law firm based in Dallas-Fort Worth that does estate planning.  

This can cause a major headache down the line. “The surviving partner will find themselves jointly owning a property with other people who may try to liquidate the property. This can be a huge problem if this is the residence of the surviving partner,” said Akrami. “To correct for this, the couple could purchase the property with a deed that provisions that property is owned with a joint right of survivorship, which reproduces the automatic protection a married couple has when purchasing a property.”

Taking these steps can give you more protections and benefits as unmarried partners and give you the freedom to choose how you want to be in a relationship.