Unnmarried couples should consider contracts and estate planning

On behalf of Bebout, Potere, Cox & Bennion, P.C. posted in estate planning on Monday, November 28, 2016.

Even unmarried couples may benefit from the counsel of a family law attorney. Specifically, an increasing number of Americans in intimate relationships are choosing to live together, rather getting married. According to data from the 2012 U.S. Census Bureau, over 15 million Americans are involved in live-in relationships. That translates to about 6.5 percent of Americans over the age of 18.

Could living together pose questions of joint property ownership? Michigan is not one of the states that recognizes common law marriage, or the existence of a marital relationship without a ceremony or legal proceeding. Nevertheless, our family law firm advises a consultation to help cohabitating adults take a proactive approach to financial clarity.

For example, a couple might still enter into a contractual agreement that describes each party’s responsibility for household bills, mortgage payments and property ownership. A contract can also help unmarried couples plan for long-term issues, such as cash flow in retirement and estate planning. Unlike marriage, gifts between unmarried couples might also raise tax issues. Gifts to someone outside of marriage are taxable if they exceed the annual $14,000 limit.

An unmarried partner also does not have a right to the other partner’s Social Security benefits. Retirement benefits in 401(k) plans can name an unmarried partner as the beneficiary, but the timing options regarding required minimum distributions may be less flexible than for a spouse. Similarly, the laws of intestacy generally will not include an unmarried partner, so it is important for an unmarried couple to devise an estate plan. These are just a few reasons why unmarried couples in Michigan should consult with a family law attorney.