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Do You Have a Non-Married Partner?

Know your rights when facing the unexpected.

Joe and Susan have been living together for five years. They’ve accumulated some joint assets (furniture, cash, and a car) and some joint debt (a line of credit and a car loan), and they’re living in a townhouse Joe bought the year before he met Susan. Then Joe has a car accident.

What happens if your partner dies?

Say Joe died in the crash, and like many young people, he had no will. Consequently, his assets — including his savings, the townhouse, and his half of the property he owned with Susan — all pass to his blood relatives. Susan receives nothing. Not only that, Susan is now homeless and dependent upon Joe’s parents to help her pay off the loans and other bills she and Joe accumulated together.

Clearly, the law does not protect unmarried partners. Oral agreements and understandings are not recognized under state law: If you have an unmarried partner (whether you live together or not), the only way to protect each other is for you both to write wills naming the other as your heir so that when either one dies, the assets will pass to the surviving partner.

If you have no will, or if you do not specifically name your partner in your will, he or she likely will receive nothing upon your death. Assuming you have no children, whatever you own will go to your parents (if they are alive) or to your brothers and sisters (if your parents have pre-deceased you).

What happens if your partner lives?

Let’s assume Joe survives the accident, but is injured and hospitalized. What can Susan do to help manage his affairs, such as paying bills and authorizing medical treatment? Without two additional legal documents (a durable power of attorney and a health-care power of attorney), not much. Susan does not have the rights of a spouse; she cannot access Joe’s checking account or sign a release for surgery — even if she knows Joe’s wishes. Joe’s doctors won’t discuss his condition with her, and Joe’s family can even bar her from seeing him in the hospital! Her only alternative is to go to court to seek permission to act on his behalf, a time-consuming and costly proposition — and one likely to meet with opposition from Joe’s family.

These problems can be avoided with a durable power of attorney and a health-care power of attorney. With a durable power of attorney, you name a person to act on your behalf should you become unable to manage your own financial affairs. The person you name as your “attorney-in-fact” can access your bank account to pay bills, sell securities to obtain cash for medical expenses, file your income tax return, and renew leases. The health-care power of attorney appoints someone (typically the person named in your durable power of attorney) to make health-care decisions on your behalf, assuming you’re unable to make them for yourself. The health-care power of attorney also allows physicians to discuss your medical treatment with that person, even though they are not related or married to you.

If your partner is the person you most trust and to whom you would like your assets to go when you die, each of you needs to get wills and durable powers now to save each other problems in the future.

Originally published in The Truth About Money

This material was prepared for informational and/or educational purposes only. Neither Financial Engines Advisors L.L.C (also referred to as Edelman Financial Engines) nor its affiliates offer tax or legal advice. Be sure to consult with a qualified tax or legal professional regarding the best options for your particular circumstances.

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