Maybe you’re in a serious relationship and considering marriage or living with someone and wondering if marriage is right for you when you have the family arrangement you already want without being married. Would you be better off designing an estate plan that meets your needs instead of tying the knot? Yes, marriage and relationships are about love, commitment, and are socially and religiously expected. However, Millennials are cohabitating without marriage and marrying later than any other generation in the past. When contemplating asset protection prior to marriage, people often map out the repercussions of divorce; but a strategically crafted estate plan could potentially protect you in the event of a divorce, as well as upon your death.
Here are some legal (non-social and non-religious) things to consider when deciding whether marriage is best for you. As always, every situation is different. Speak with an estate attorney to see if you could create the family you want with an estate plan instead of marriage.
Inheritance:
Unmarried: Without an estate plan stating otherwise, you and your significant other will not inherit his/her property when either of you passes away. This could be severely detrimental you could find yourself sharing assets you contributed to the ownership of.
Married: Contrary to popular belief, when your spouse passes away, you don’t inherit all of his/her property. If your spouse passes away and there is no will, you could find yourself sharing his/her estate with his children. It is preferable to being able to inherit nothing owned solely by your significant other in the event he/she passes before you’re married. However, even if you do decide to get married, you should still have a strong estate plan in place to ensure that you’re both protected.
If you purchase a house together as a married couple (tenants by the entirety), your spouse will become the 100% owner of your marital home upon your death. There will be no need to probate a will or involve the surrogate’s court.
How can an estate plan help?: You do not need to get married in order to have your significant other inherit the property you own with an estate plan. You could leave everything (or certain assets) to your significant other in your estate plan without needing to be married. In certain circumstances, you can arrange it so that there is no need to probate a will or involve the surrogate’s court. However, if you do decide to get married, property may still not pass the way you wish. Therefore, whether you decide to get married or not, you should have an estate plan.
*For more general information on this topic, see our blog “Unmarried But Living Together?”
Medical Decisions:
Unmarried: Without an estate plan, your significant other will have no right to make medical decisions on your behalf or control your property upon your incapacity.
Married: Your spouse will have the ability to make medical decisions for you without an estate plan.
How can an estate plan help?: If you have an estate plan, you can specify specific individuals or groups of individuals who will be able to make medical decisions for you and handle your affairs upon your incapacity. If you’re not married, it will not be your significant other. Therefore, if you want him/her to have controlling say in these intimate decisions, you need an estate plan if you decide to not get married.
*For more general information on this topic, see our blog “Unmarried But Living Together?”
Debt:
Unmarried: You and your significant other’s finances, bank accounts, credit card debts, student loans, car loans, and all other money owed is no responsibility of an unmarried partner whose name is not linked to the debt.
Married: If your significant other has debt, including student loans, when you two get married, you could be negatively affected by money owed that you did not borrow or spend. Many factors influence how your significant other’s debt will affect you, such as when the debt was incurred if you were a cosigner, the time when your spouse stops making timely payments, which state you’re married in or live in at the time of death. Additionally, if your spouse passes when debt is owed, the debtor could assert the debt against your spouse’s estate, which could include money and assets you’ve contributed to the purchase of. If you have student loan debt, getting married could affect your ability to be eligible for income-based repayment plans offered by the government.
How can an estate plan help?: To protect yourself from the debt of your significant other, you do not need to have an estate plan. However, if you do decide to get married, you may wish to have an estate plan instead to protect your jointly purchased assets (such as a house) from being subject to a creditor. Additionally, you may wish to have an estate plan to protect your property from being subject to a surviving spouse or significant other’s creditors.
Taxes:
Unmarried: Even if you’re living with your significant other, you will file your taxes without the income and deductions of your spouse. If you have children in common, only one of you can claim the children. This can be used to your advantage or disadvantage.
Married: Depending on your income level, being married could provide tax advantages. Contrarily, depending on your income level, being married could come with tax penalties for having higher combined income.
In the event you are unemployed and do not earn income, by being married, you are legally permitted to have and contribute to an IRA.
How can an estate plan help?: One advantage of an estate plan when you’re married is that you can leave everything (or certain assets to your spouse), and estate tax does not need to be paid on assets left to a spouse upon the other’s death. If you create a Last Will and Testament that leaves property to your spouse-like significant other, he/she will not have the same tax benefits as a surviving spouse. As such, you may wish to transfer property to certain individuals while you’re alive to avoid certain tax consequences.
*The Law Offices of Jennifer G. Tocci, P.C., Jennifer G. Tocci, Esq., and any of its affiliates, co-counsel, and associates do not offer tax advice and the information above is for general information only. It should not be used to substitute accounts, tax advisors, financial advisors, or attorneys.
Credit Score:
Unmarried: If you’re unmarried, for all of your significant other’s debt, credit cards, car loans, and bills not paid on time will not affect your credit score unless you are a cosigner or a joint purchaser.
Married: If your significant other has a poor credit score, your credit score won’t be lowered, but it could affect your interest rates and ability to purchase items on credit (i.e.: car loans), obtain mortgages, or open credit cards together.
How can an estate plan help?: In certain circumstances, an estate plan can arrange it so that property purchased by one party can be owned by, transferred to, or inherited by a significant other and family members without being subject to creditors.
These are just a few examples of factors to consider when deciding whether to get married. This blog is merely designed to give a brief overview of common situations. Your estate planning attorney could help you design an estate plan that achieves all of your goals, whether you decide to get married or not. Call the Law Offices of Jennifer G. Tocci, P.C., (631) 343-7676 for a personalized assessment of your life plan.
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