For unmarried couples, estate planning is an essential step in ensuring that their shared assets and personal wishes are legally protected. Unlike married couples, who benefit from automatic legal rights in inheritance and decision-making, unmarried partners must take specific legal steps to safeguard their interests. Without proper planning, assets may not pass to the surviving partner, and critical decisions may fall to family members instead of the person you trust most.

Key Considerations for Unmarried Couples

1. Wills and Trusts

A will is one of the most important documents for an unmarried couple. Without a will, Pennsylvania intestacy laws dictate that assets pass to biological family members, leaving a surviving partner with no legal claim. A well-drafted will ensures that your partner inherits the assets you intend for them.

A trust can also be an effective tool for managing and distributing assets. A revocable living trust allows partners to retain control over assets during their lifetime while ensuring a smooth transition of ownership upon death. Trusts also help avoid probate, providing privacy and efficiency in asset distribution.

2. Joint Ownership and Beneficiary Designations

Another way to ensure asset transfer is through joint ownership with rights of survivorship. If assets such as real estate or bank accounts are held in joint tenancy, the surviving partner automatically becomes the sole owner upon the other's death.

Beneficiary designations on retirement accounts, life insurance policies, and payable-on-death (POD) or transfer-on-death (TOD) accounts also ensure direct asset transfer to the named individual, bypassing probate.

3. Power of Attorney and Healthcare Directives

In the absence of legal documentation, an unmarried partner may not have the authority to make financial or medical decisions. A financial power of attorney allows a partner to manage financial affairs if the other becomes incapacitated. Similarly, a healthcare power of attorney and living will ensure that medical decisions align with the individual's wishes and are made by the trusted partner rather than distant relatives.

5. Inheritance Tax Considerations

Unlike married couples, who enjoy unlimited tax-free transfers, unmarried partners in Pennsylvania may face inheritance tax when inheriting assets. Pennsylvania imposes an inheritance tax of 15% on assets passing to an unmarried partner. Strategic planning, including the use of trusts and lifetime gifting strategies, can help mitigate potential tax burdens.

Taking the Next Step

Estate planning is crucial for unmarried couples to ensure their wishes are honored and their loved ones are protected. Consulting with an experienced estate planning attorney in Pennsylvania can help you establish a comprehensive plan tailored to your needs. My office offers free consultations and will happily guide you through the estate planning process. I invite you to use the link below to schedule a free consultation today to discuss your options.

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