Estate Planning is Crucial for Unmarried Couples

Same-sex and unmarried couples do not enjoy the same legal rights as those of traditional married couples because Michigan does not recognize same-sex marriage or common-law marriage for its residents. Michigan law does not provide for ownership of property, or recognition of decision-making power, for unmarried couples unless specific legal documents are in place for those purposes. Therefore, it is very important for life companions to pay special attention to their estate plans, including wills, trusts, beneficiary designations, and property ownership, to ensure that each of them receives the property intended by the other partner.

 

Married couples enjoy certain property rights under Michigan law even if they did not make advance arrangements for each other prior to death or incapacity. For example, if a married person does not provide any property for his or her spouse upon death, the survivor is still entitled to certain cash or property “allowances”, and a portion of the deceased spouse’s estate. Most states have rules specifically designed to prevent a surviving spouse from being disinherited. Unmarried couples do not have any such rights.

Unmarried couples must also give special consideration to medical and financial powers of attorney so that their companion will be recognized to make decisions in case of incapacity. Again, Michigan law grants no such power to unmarried couples no matter how long they have been together. Living trusts are especially useful for unmarried couples to maintain uninterrupted property management and decision making power for each other.

Similarly, federal law does not grant any rights to retirement plans, annuities, or other financial assets for an unmarried partner. Therefore, it is critical to designate beneficiaries on all insurance policies, annuities, retirement accounts, and other financial assets.

Unmarried couples with children have even greater estate planning needs because children have higher priority to inherit property than an unwed partner. In that case, conflicts are certain to arise with respect to property ownership. The only way to overcome these challenges is ensure that beneficiary designation and estate planning documents are coordinated to achieve specific objectives.

Life companions must carefully plan every aspect of their estate to prevent unintended consequences. They cannot depend on protective laws to correct mistakes, or to compensate for failure to plan.