It is perhaps more important for unmarried couples to have an estate plan in place than it is for married couples. Unlike married couples, unmarried couples have no right to the probate property of a deceased spouse, including the right to remain in the residence for a duration of time, receive a spousal allowance, receive a vehicle and at least a portion of the estate. Indeed, your unmarried partner, like any other person who is not your spouse or is otherwise unrelated to you, has no right to your property. Thus, for an individual to pass on property to his unmarried partner, it is not just advisable, but absolutely necessary, to make use of estate planning tools.
Note on Common Law Marriage. At the outset, it is important to note that in Ohio, one can no longer enter into a common law marriage. Although the law may recognize a common law marriage entered into before October 10, 1991, it will not recognize common law marriages entered into on or after that date. Thus, one entering into a supposed common law marriage on or after October 10, 1991 will not have the marriage recognized and cannot claim elective spousal rights in their partner’s estate after that partner’s death.
- Last Will and Testament: With a will, you can explicitly designate that your partner receive a certain share of your estate, or specific items of property within it. You can also appoint your spouse as executor, to administer your estate. Upon your death, the terms of your Will will be carried out through a court-supervised process called probate. Some people perceive the probate process to be cumbersome and expensive, and seek to avoid it through various non-probate means of transfer, like trusts and beneficiary designations.
- Life Insurance Policies: You can purchase a life insurance policy, and designate your partner as the beneficiary. After you pass, the policy will pay out the proceeds to your partner. Life insurance policies are not subject to the probate process.
- Transfer on Death (TOD) Designation Affidavit: A TOD Designation Affidavit on real estate will cause the property to transfer on your death to whomever you designate without the need for a probate proceeding. The TOD has the advantages of both avoiding probate and maintaining your control over the property during your lifetime.
- Beneficiary and Payable on Death (POD) Designation: One may enter into a contractual arrangement for funds to transfer automatically on their death to a named beneficiary. A common example is to have a POD on a bank account or a beneficiary designation on a retirement account. To collect property held under the POD, all the beneficiary need do is file a death certificate with the financial institution holding the property.
- Trusts: With a trust relationship, you can entrust property to a third party for the benefit of your partner. The trust can be created and exist during your lifetime, or can come into existence upon your death.
- Financial Power of Attorney and Health Care Power of Attorney: Should you become incompetent and your partner needs to access to your finances to pay bills, sell property, etc. or otherwise make health care decisions for you, you will need to appoint your partner your agent under a durable financial power of attorney and health care power of attorney. Otherwise, he would need to file with probate court to be appointed guardian and generally, next of kin are favored for appointment.
For more information on estate planning for unmarried couples or on estate planning in general, contact a Cleveland Estate Planning Lawyer.