Introduction
For unmarried couples, legal and financial planning involves a unique set of challenges that married couples often do not face. Without the automatic legal protections provided through marriage, it becomes essential to plan and formalize important decisions in writing proactively. Whether you are protecting property rights, ensuring access to medical decisions, establishing parental responsibilities, or securing your partner’s financial future, taking the appropriate legal and financial steps now can provide clarity, peace of mind, and long-term protection. This guide outlines key areas where careful planning and legal documentation can make a significant difference.
Legal Protections and Agreements
What legal issues do you face?
As an unmarried couple, you must create your own legal safeguards. Without the default protections that come with marriage, decisions regarding health care, finances, and property may fall to biological family members unless legal documentation states otherwise.
Creating a Domestic Agreement and Supporting Documents
Many unmarried couples choose to create a domestic agreement, also called a cohabitation agreement, living together agreement, or nonmarital agreement. These documents outline shared responsibilities such as income, expenses, and property. While useful, they do not cover all areas that may require legal protection.
To strengthen your legal standing, consider creating the following additional documents:
- Durable power of attorney for health care or health care proxy
- Durable power of attorney for finances
- Will or living trust
- Parenting agreements and guardianship designations if children are involved
- Living will or declaration of medical wishes
Registering Your Partnership
Some municipalities and employers offer domestic partnership registration, which may provide limited legal recognition of your relationship. This typically involves signing an affidavit and paying a small fee. Registration may allow access to health insurance, hospital visitation, or bereavement leave. However, rights vary greatly by location and employer, so consult a professional before registering.
Financial Planning Considerations
Plan for greater financial independence
Without access to spousal benefits or guaranteed family support, unmarried couples may need more robust financial plans. This is especially important if you are estranged from relatives or lack a broader support network. Consider building a larger financial reserve or securing additional insurance.
Disability coverage
Disability insurance can replace a portion of your income if you are unable to work. Review available policies and consider selecting one with a higher benefit if you are less likely to receive outside support during a health crisis.
Health Insurance Considerations
Some employers extend health insurance to unmarried partners. However, unlike spousal benefits, these are often considered taxable income by the federal government unless the partner qualifies as a dependent. Review the tax impact of using a partner’s plan and compare costs with your own employer’s plan before making a decision.
Estate Planning Considerations
Do not take anything for granted
Estate planning is critical for unmarried couples. Without legal documentation, your partner may not receive your assets, make medical decisions, or remain in shared housing. Even previously agreed arrangements can be overturned by next of kin if not legally protected.
Planning for illness and incapacity
Medical personnel typically defer to immediate family unless legal documents state otherwise. If you want your partner to make health decisions for you, execute a health care proxy and a living will.
Transferring your estate
To transfer your estate to your partner, consider the following tools:
- Joint ownership with rights of survivorship for property and accounts
- Beneficiary designations on retirement accounts and insurance
- Living trusts
- Wills
Property not directed by these tools will go through probate under state intestacy laws, which usually prioritize biological relatives.
Avoiding probate
To keep your estate private and reduce court involvement, pass assets directly to your partner through joint ownership, beneficiary designations, and trusts.
Will Challenges
Even with a will, there is a risk of legal contest from family. A successful challenge usually requires proving fraud, undue influence, or mental incapacity. However, the probate process itself can open the door to these disputes.
Reducing the risk of a will challenge
- Reference all family members in your will. If you exclude someone, briefly explain why.
- Add a no contest clause stating that anyone who contests the will receives nothing.
- Draft your will early if you have a serious illness.
- Execute documents without your partner present to avoid claims of undue influence.
- Share your plans in advance with someone who can verify your wishes if needed.
A domestic agreement can also support your estate plan by reaffirming your intent and documenting joint financial decisions.
Parental Rights Considerations
Legal safeguards for parents
Unmarried parents may not automatically have custody, visitation, or decision-making rights. In the absence of legal recognition, a nonbiological parent could be excluded from the child’s life after a breakup or the death of their partner.
Child custody and legal ties
Depending on your state’s laws, both parents may not be automatically recognized. You may need to pursue adoption, sign a paternity or parentage declaration, or seek a court order to establish legal parentage.
Key documents to protect parenting rights
- Birth certificate naming both parents
- Paternity or parentage acknowledgment
- Co-parenting agreement
- Guardianship clause in a will
- Authorization to consent to medical treatment
Discuss your family structure with schools, doctors, and others in your child’s life so they understand both parents’ roles.
Tax Considerations
Filing status and dependents
As an unmarried couple, you may not file jointly. In some cases, one partner may qualify as head of household, but strict criteria apply. Check with a tax advisor to determine eligibility.
Domestic partner benefits and deductions
If your partner receives health benefits through your employer, the value is typically taxable unless your partner qualifies as a dependent. Similarly, you cannot deduct their medical expenses unless they meet the dependent criteria.
Conclusion
Planning for the future is especially important for unmarried couples who do not benefit from automatic legal protections. Whether you are securing financial stability, medical authority, or parental rights, taking these steps now reduces uncertainty and ensures your wishes are honored. With the right legal documents and thoughtful planning, you can build a foundation that protects your relationship and provides long-term security for both you and your loved ones.
Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here. Click here to sign up for our newsletter with the latest economic news.
Source:
Broadridge Investor Communication Solutions, Inc. prepared this material for use by Scarlet Oak Financial Services.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on individual circumstances. Scarlet Oak Financial Services provide these materials for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
