Proper estate planning is an essential consideration for everyone and particularly important for unmarried partners. While Florida law can protect the interests of a surviving spouse in the event the decedent did not have a valid will, unmarried couples do not have that same support. Florida does not recognize common law marriages, and as such, those provisions do not apply in cases of people in a committed relationship that are not married. Similarly, without the basic essentials of an estate plan in place, unmarried partners could also be left out of medical decisions and end-of-life directives for one another.
With a little bit of thought and communication, most of these issues can be addressed by simply taking the time to complete the basic components of an estate plan. Throughout this article, we will be looking at a sample couple named Roger and Elizabeth. Both are widowed for several years and in their 70’s with adult children from their respective marriages. They have been together for three years and recently decided to live together in Roger’s house, which he owns outright in his name only, after the passing of his wife.
Update Your Will – Whether never married, widowed or divorced, a simple will for each partner in a domestic relationship is the easiest and most straightforward way to direct individual legacies. Without specific direction in a will, neither partner in our example would inherit from each other under the simple language of “I leave everything to my spouse”. Since they are not married, spousal rights don’t apply and, in this case, Elizabeth would inherit nothing if Roger were to pass away and his assets would go to his own children. Obviously, every relationship is unique, and our sample couple may be completely fine with this scenario. However, to avoid the unpleasantries of a surprise, an updated will and a little communication will go a long way.
Titling of Assets – Consider appointing beneficiaries to your respective banking and investment accounts. Pay-on-Death and Transfer-on-Death accounts go straight to the named beneficiaries and avoids the delay of processing that portion of your estate through probate. Roger and Elizabeth have done just that – naming each other as beneficiaries on only their respective checking/savings accounts. They have decided that bulk of their individual resources should pass directly to their respective bloodlines. The decision to appoint each other as a beneficiary on the banking accounts was to provide short-term coverage for the survivor to pay for the responsibilities of their life without worry that there wouldn’t be enough money.
Living Trust – Roger and Elizabeth have each elected to create a revocable living trust. As mentioned, they feel very strongly that each of their legacies should be inherited by their individual bloodlines. Neither of them is considered as a “high net worth individual”, but each partner can maintain an independent lifestyle with their own resources. The living trust provides for clear direction on the transfer of assets upon death, and in Roger and Elizabeth’s case, these assets flow directly to their respective children.
Decision on the House – As we stated at the beginning, Roger and Elizabeth live together in Roger’s house, which is titled in his name only. Since the house represents a significant part of Roger’s assets, he wants to make sure his children inherit the property or its equivalent value. Should Roger pass away first, Elizabeth would find herself with no legal right to remain in the house, even for a short-term period, if Roger’s children were looking to sell the home as soon as possible. The most beneficial way to address this would be to have Roger to place the house in his trust. A provision within the trust could be written to grant Elizabeth the right to live in the house for a period of time, say twelve months from Roger’s passing. After that initial period, the trust would direct the trustee to sell the property and distribute the proceeds to Roger’s children, per his instructions.
Finally, make sure your powers of attorney, health care proxies and medical directives are updated. In some cases, incapacity is more challenging than death. Appointing a durable power of attorney to manage your affairs if you are incapacitated is one of the most important things you can do. In terms of healthcare and medical decisions, spousal rights do not automatically apply for unmarried couples and consequently, doctors may not take direction from or even provide updates to your significant other.
Some simple planning and communication can go a long way in providing clarity to the people closest to you. Make sure to spend some time with your trust and estate attorney to make sure your plan is reflective of your intentions.
Joseph C. Pauldine is a Senior Vice President of Cypress Bank & Trust. Mr. Pauldine assists individuals and their families with custom investment management solutions and trust administration services. He received his B.S. in Business Administration from Old Dominion University.
Cypress Bank & Trust is a boutique corporate fiduciary that focuses on creating customized investment strategies, serving as a corporate trustee, personal representative or agent during estate settlement and as an administrative trustee for clients already committed to an investment plan. Trust and Portfolio Management services offered by Cypress Bank & Trust are not insured by the FDIC; are not deposits, are not guaranteed; and are subject to investment risks, including possible loss.