Unmarried couples face unique challenges for estate planning. Unlike married couples, they don’t automatically benefit from spousal inheritance or tax benefits. Therefore, it’s essential for unmarried couples to proactively ensure their wishes are honoured and assets protected.
- Wills
For unmarried couples, a Will is key for your estate planning because without one, the laws of intestacy apply to the distribution of your assets, so your partner wouldn’t receive assets. In your Will, you should clearly name your partner as a beneficiary. You can also name a guardian for any children in your Will.
- LPAs
When you no longer have the mental capacity to make your own decisions, its useful to have pre decided who will make your decisions as part of your estate planning. An LPA allows you to allocate who will make such decisions and often people pick their partner. There are two types of LPA: 1) Health and Welfare (e.g. to make medical decisions) and 2) Finance and Property (e.g. to manage your finances, pay bills).
- Beneficiary Designations
Life insurance policies, death in service / retirement benefits and investment portfolios, allow you to name beneficiaries. These named beneficiaries override your Will, so you need to update them for your partner to benefit. To avoid conflicts, its best to ensure that the beneficiaries you designate, match your Will beneficiaries.
- Living Trusts
A Living Trust allows you to place assets in a trust, naming your partner as the beneficiary. This not only avoids the probate process but also ensures privacy and immediate transfer of assets upon your death. Trusts can also include provisions for managing your assets if you become incapacitated.
- Joint Ownership
Couples often hold property (e.g. a home or bank account), jointly. Joint ownership allows assets to transfer directly to the surviving partner upon death. But from a tax perspective, it’s worth checking if holding your property (e.g. home), as a tenant in common (surviving partner doesn’t automatically inherit as the deceased’s share passes to their estate) would be beneficial.
- Living Wills
Unmarried couples are not automatically entitled to access each other’s medical records or to make healthcare decisions so, in addition to a Health LPA, you should consider creating a Living Will to specify your wishes regarding medical treatment and end-of-life care.
- Life Insurance
In the case of death, life insurance can provide financial security for your partner. To decide the amount of cover you need for life insurance, think about how much you’d need to cover shared responsibilities like income replacement, mortgage obligations, and future goals such as funding education for any children.
- Tax
Unmarried couples don’t receive the same tax exemptions as married couples. Taxes may apply to asset transfers, so it’s essential to consult a tax adviser when considering your estate planning. Note that, gifting assets during your lifetime, can help reduce your IHT.
- Digital Assets
As part of your estate planning, it is useful to provide your partner with instructions and passwords for managing digital assets such as social media accounts, financial platforms, and online subscriptions.
Next Steps for Your Estate Planning
If you’d like to speak to an adviser about your estate planning, please book an appointment using the link at the top of this page.
