Protect Your Partner from Legal Problems

Kiplinger's Retirement

Report

So, you don't want to get married?You're not alone. Accordingto , there are 11 millionunmarried adults who livetogether in the United States—that's a72% increase during the past decade.Many of these adults will encounter significantlegal challenges when it comesto planning and preparing to care forone another in the future.

Document Everything

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Ensuring your partner is financiallysecure and that each of you is able tomake financial and health care decisionson behalf of one another is especiallyimportant for unmarried couples.suggests several keydocuments to have in place.

A durable health care power ofattorney allows your partner to makehealth care decisions on your behalfshould you become incapacitated.Similarly, a financial power of attorneydesignates an individual to manageyour finances and property. Its scopecan be broad or limited and transferscomplete authority immediately orupon certain conditions.

When it comes to passing personalassets on to your partner, life insuranceand IRAs pass directly to the namedbeneficiary. Likewise, property heldjointly with the right of survivorshippasses directly to the joint owner. Butwhat about other personal belongingsthat fall under the heading of probateproperty? A will clearly indicates whoreceives your property, enabling you topass specific items in your estate toyour partner. To play it safe, consider aliving-together agreement, also knownas a domestic-partnership or nonmaritalcohabitation agreement. This documentdetails how you and your partnerwish to handle your personal assetswhile living together and in the eventyou separate.

Common-law Health Care

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also clarifies a commonmisconception: Living with someonefor a given period of time does not necessarilymean your partnership is considereda common-law marriage. Infact, only 15 states recognize common-lawmarriages. Even in these states,couples are required to use the samelast name or file joint tax returns.

In the case of health care benefits,many companies that offer healthinsurance to their employees'domesticpartners will do so for both different- andsame-sex couples. Employers mayrequire an affidavit affirming that theindividual receiving the benefit is yourdomestic partner and that you are livingtogether. Additional documents,including evidence of joint home ownership,may also be necessary.

Deciding Beneficiaries

When it comes to estate planning,the benefits are decidedly in favor ofmarried couples. With the unlimitedmarital deduction, married couples canpass an unlimited sum on to a spousefree of federal estate taxes. In addition,while a spouse is generally entitled to aportion of their deceased spouse'sestate, domestic partners are not.

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Similarly, marital status has its shareof advantages when it comes to inheritingan IRA. states that aspouse who inherits an IRA can roll itinto their own account and name newbeneficiaries. Withdrawals, which arebased on the life expectancies of thesurviving spouse and the beneficiary,are not required until the survivingspouse reaches age 701/2. However,anyone who inherits their partner'sIRA is viewed no different than a nonspousalbeneficiary. Required distributionsmust generally begin in the yearfollowing the owner's death.

Living Together: A

Legal Guide for Unmarried Couples

Unmarried to Each Other: The

Essential Guide to Living Together as

an Unmarried Couple

Additional information for unmarriedcouples is available from the followingsources: (NOLO; 2006) by Frederick Hertz,Ralph Warner, and Toni Ihara, and(Marlowe &Company; 2002) by Marshall Millerand Dorian Solot.