Domestic Partnership News Archive
May 29 - May 31, 2001

Wednesday, May 30, 2001

Protecting your interest while living together

A story published today by the Baltimore Sun reports that a trend recently revealed by the new U.S. Census data shows that more and more unmarried couples are cohabitating together. Over the past decade, the number of unmarried couples living together grew 72 percent to 5.5 million couples. Census Bureau's Martin O'Connell stipulates that the increase may come from "echo boomers," a large generation now entering its early 20s, choosing to share a household with a mate rather than marry. Baby boomers are also opting to live with a partner before embarking on a second marriage, he says.

That means if unmarried couples want to protect their interests, they need to take some financial steps. And the first move, experts say, is for partners to discuss financial expectations and what will be "yours, mine and ours."

Experts recommend unmarried couples consider these other financial steps:

Powers of attorney

If one partner becomes incapacitated, the other will need power of attorney to handle the ailing partner's finances. Each partner also will need a health care power of attorney to make medical decisions for an incapacitated partner. This document also may be needed to protect a partner's right to make hospital visits, says Mary Agnes Sheehan, an estate-planning lawyer in Bethesda, Md.

Because hospitals sometimes allow only one visitor, Sheehan recommends including specific language in the health care document "giving the power of attorney the right to visit and to determine who gets to visit."

Will

Die without a will and state law determines which relative gets what.

Letter of instruction

Disputes can arise at death between a surviving partner and family members about burial, and particularly about cremation. In a letter of instruction, you can list your wishes and name someone to make funeral decisions on your behalf.

Beneficiaries

Individual retirement accounts, life insurance policies, 401(k) accounts and even some stock options allow you to name a beneficiary. To avoid confusion and ensure your assets go to the desired heir, make sure your beneficiary designations are in sync with your will and property titles. Beneficiaries named on an account or policy override a will, says Sheehan.

Cohabitation agreement

A cohabitation or domestic partnership agreement can spell out how assets will be split when a couple parts, whether mediation will be sought, or if one partner will receive financial support. "The purpose of a domestic-partnership agreement is to create the rules of divorce," says Harold Lustig, a San Francisco financial planner and an author.

"There is no element of built-in protection unless they put this in a contract," Lustig says.

Estate planning

A married couple can leave unlimited assets free of federal estate tax to the surviving spouse. Unmarried individuals, on the other hand, can leave up to $675,000 to a partner or other heirs tax-free. Those with sizable estates will need to do some estate planning to avoid hefty estate taxes. That may include buying life insurance to pay potential estate or inheritance taxes, experts say.

Titling property

For unmarried couples, property ownership basically will be determined by how assets are titled. Joint tenancy with rights of survivorship, for instance, would means that when one partner dies, the other automatically becomes sole owner. A drawback for someone with a high net worth is that at death the full value of the house will be considered part of the federal taxable estate.

Retirement planning

Because unmarried couples won't be eligible for survivor's benefits from Social Security or traditional pensions, they must set aside additional assets for retirement, says Gay Abarbanell, a financial planner in Culver City, Calif.

Canadian province increases domestic partner rights