A growing number of North Carolina couples are living together outside of marriage. This choice is facilitated by changing cultural expectations as well as negative personal experiences with marriage and divorce. Couples who choose not to get married may want to take intentional steps to protect their assets and each other over the long term.
The financial status of unmarried partners
Marriage makes discussions about estate planning simpler under current laws. Assets automatically transfer to the surviving spouse after a partner dies. This transaction happens without additional state or federal taxes.
The situation is different for cohabitating partners. When the assets exceed federal or state exemption amounts, estate taxes come into play. If someone attempts to give assets to a partner while living, the money is a taxable gift if it exceeds the $16,000 federal exclusion threshold.
Retirement accounts are another place where partners should take intentional action. The owner must list their partner as a beneficiary on the account if they want them to be able to access the asset.
One possible estate planning solution is to use non-taxable life insurance policies to provide assets after death. Developing an estate trust can also protect some assets from taxation.
Property sharing for unmarried couples
Many cohabitating couples live in a home owned by one of the partners. This situation can create complications if the owner dies. Without a clear >last will and testament or a legal estate planning document providing survivorship rights, the property might transfer automatically to the family members of the owner.
This consideration also applies to property beyond the main domicile. Cars, boats and vacation homes are all potential sources of contention when distributing the estate.
The importance of a legal will
The absence of a will limits the ability of the legal system to carry out an individual’s wishes. This binding document clarifies asset distribution by naming an executor and trustees. It also avoids the delay of the estate sitting in probate.
Helping loved ones move forward
Estate planning is not only a means of carrying out your wishes, but it also helps your partner and family members move forward after your death. By providing clarity now, you are preventing confusion after you pass.
