Many couples, both same-sex and opposite-sex, choose to live together in a committed relationship yet stay unmarried, whether for financial reasons or personal choice. When our clients are in relationships such as these, there are steps and strategies we must focus on to protect their financial commitments.
One of the keys to financial planning for unmarried couples is legal documentation. Because many couples do not have the automatic protections that contractual marriage affords, (passage of wealth in the case of loss of life, hospital access in case of emergency, shared health benefits, etc.), we need to be able to simulate those benefits other ways. Many estate attorneys will do this through the use of the following key documents:
Powers of Attorney : A Financial Power of Attorney allows you designate to access and control your financial assets if you are incapacitated. Medical Power of Attorney is similar but deals with the medical side of things; if you are not able to make decisions about your health then the Medical Power of Attorney that you have designated will make these decisions on your behalf.
Living Will: Through a living will, you tell people what you want done if you need life-sustaining medical treatment, pulling. There is an area in this document that can talk about being a donor and what you would like to have done with your body after passing if it includes a Last Remains Designation.
HIPAA Release: Your HIPAA Release document is permission for the physician to release your medical condition to the person who has the HIPAA. This allows your doctor to work directly with your partner for the benefit of your care in the case of any kind of health situation.
Living Trust: A Trust is a contract that holds title to and controls your assets. This can be a crucial part of planning for LGBT partners. The main focus of this document is to make sure your assets go where you want. It also protects your privacy; it remains confidential and does not become a matter of public record. If your estate would go to court in a probate process without a living trust, a judge would decide where everything would go and looks to family (blood relations) first.
Also, it is important to name your partner as your beneficiary, if that is whom you choose, on any retirement accounts such as a 401K, or IRAs. In the case of a married couple where one spouse passed away and did not name a beneficiary on his/her, the account would automatically default to the surviving spouse. This is not the case for unmarried couples. Our Trilogy advisors will make sure all your assets have the correct titling and have the correct beneficiary designations.
Having these five key documents in place often creates the groundwork for key financial conversations between you and your partner. It can help you clarify your shared goals and then use those shared goals to make significant progress on your financial plan. Communication between partners, recognizing shared goals, and finding financial compatibility. Couples who achieve these steps have much more working for their financial futures than those who do not.