In celebration of single folks around the country, the third full week of September is observed as Unmarried and Single Americans Week.
The week is an acknowledgment that many unmarried Americans do not identify with the word “single” because they are parents, have partners, or are widowed.
According to the latest data from the Census, there are over 7.5 million unmarried couples living together in the United States, and nearly 40% of those households have children.
While commitment ceremonies, are the new “Orange,” when it comes to making a lifelong commitment, your beloved does not have the same legal rights as a married spouse, even if they hold the same place in your heart.
“When a couple gets married, there’s many legal rights and benefits that are awarded to a spouse that are not awarded to committed couples, no matter how long they’ve been together,“ says Colleen Carcone, a financial advisor for TIAA-CREFF.
These rights, responsibilities, and benefits range from tax planning, to estate planning, to social security. It’s really an important moment to understand these things because there is such a trend taking place in not going through the marriage process,” she adds.
BlackEnterprise.com spoke to Carcone about some of the ways in which unmarried couples can provide each other with financial security.
BlackEnterprise.com: You say one of the biggest considerations for unmarried couples should be estate planning. Can you elaborate?
Carcone: There are a few different things to think about. If you’re not married, your partner will not have rights under state laws. For example, if you died without a will, your spouse may inherit under state intestacy statutes. If you’re not married, and you’re not related, your partner has no rights at all. This makes it particularly important for any couple who chooses not to get married to make sure they put an estate plan in place.
What are the basic components people need to put together to build an estate plan that will provide financial security for their partners?
Obviously a will, so that your assets are treated how you want upon death, but it’s incredibly important to think about the other legal documents you’ll need in case you become incapacitated, which would provide care during that time. There’s durable power of attorney, which is a document that allows you to name someone to step in and manage your financial assets should you become incapacitated. There’s a healthcare proxy, which allows you to name someone to make medical decisions on your behalf. There’s also a living will in which you express your wishes with respect for medical treatment.
What happens when these documents are not in place?
Absent validly executed documents, your partner would have to rely on the court system. If there isn’t a legal marriage, courts may not grant your partners the ability to manage these affairs. Get realistic about the fact that if you’re incapacitated or pass, your partner is going to be distraught, to say the least. The last thing you would want is for them to have the burden of dealing with the court system as well.
Where should people begin?
Start by making sure that you and your partner know each other’s wishes. You want to speak to a financial advisor and estate planning attorney, someone who is qualified to get your documents in place. It’s so important to sit down with someone, put pen to paper, and make sure something is in place that is going to accomplish your objective. There are always ways to clean things up if you haven’t planned properly, but you need to have something in place so that your assets will be taken care of and passed on to the person you want.
Some assets, like insurance and retirement accounts, pass through beneficiaries. What should unmarried couples know about this?
Retirement accounts, 401 (k)’s, IRA’s, life insurance, annuities, what have you, it is important to make sure you have the right person named. These accounts typically bypass probate and go directly to the named beneficiaries. What’s different for married and non-married couples is that when you name a legally married spouse as a beneficiary, they have more withdrawal options regarding when the money comes out than non-married couples. The most important thing, however, is to make sure that your partner is named.