For many couples, marriage isn’t a prerequisite for building a life together and sharing property and assets. However, the legal protections offered to married couples do not automatically extend to unmarried partners, making proper estate planning all the more crucial.

Unmarried couples who have chosen to cohabit or invest in assets together need to take steps to guarantee that their partner’s interests are protected, and their wishes are carried out in the event of incapacity or death.

In this blog, we will discuss the essential estate planning tools unmarried couples should consider, including wills, trusts, and legally-binding property agreements, to ensure that each partner’s future is secure.

By working alongside a professional will writing service like Sovereign Planning, unmarried couples can create a tailored estate plan that addresses their specific requirements and unique circumstances. The bespoke approach provided by Sovereign Planning ensures that your assets are protected, and your partner’s interests are given the respect and consideration they deserve.

From will writing to trusts, and advising on property arrangements, their services cater to the unique needs of unmarried couples. In the following sections, we will explore each of these tools, offering insights into how they can be utilised for holistic estate planning.

The Importance of Wills for Unmarried Couples

Understand the benefits of creating a will as an unmarried couple, ensuring your partner’s inheritance and asset distribution according to your wishes:

• Inheritance under the Rules of Intestacy: Without a will, your estate would be distributed according to the rules of intestacy, which often exclude unmarried partners, leading to potential financial struggles and legal battles.
• Specifying Beneficiaries: A will allows you to detail how your assets should be distributed and include your unmarried partner as a beneficiary, ensuring they are provided for as you have intended.
• Appointing Executors and Trustees: In your will, you can designate trusted individuals to manage your estate and trusts, providing additional safeguards for your partner’s future financial security.

Establishing Trusts for Unmarried Couples

Explore various trust arrangements that unmarried couples can consider to protect their assets and provide for each other:

• Life Interest Trusts: This trust type allows your partner to benefit from your assets (e.g., a property) during their lifetime, while ensuring those assets ultimately pass to your chosen beneficiaries (e.g., children from a previous relationship).
• Discretionary Trusts: These flexible trusts give the trustees discretion over distributing income and capital to beneficiaries, which can include your unmarried partner, offering tax management and asset protection benefits.
• Joint Tenancy vs Tenancy in Common: If you own property together, revisiting property ownership arrangements can help protect your partner’s inheritance rights. Holding property as ‘tenants in common’ allows each partner to bequeath their share of the property in their will, whereas ‘joint tenancy’ automatically passes the entire property to the surviving partner, regardless of your will’s provisions.

Legal Agreements for Co-ownership and Co-habitation

Delve into the benefits of obtaining legally binding agreements to protect your shared assets and finances:

• Cohabitation Agreements: These agreements outline the financial rights and responsibilities of unmarried couples who live together, encompassing matters such as rent, mortgage payments, utility bills, and the division of assets upon separation.
• Declaration of Trust for Jointly Owned Property: This document records the respective financial contributions of each partner towards a jointly owned property, clarifying how the property’s ownership and future proceeds should be divided.
• Lasting Power of Attorney (LPA): Appointing each other as attorneys for health and welfare and property and financial affairs LPA arrangements ensures that, should one partner lose mental capacity, the other partner can continue to make crucial decisions on their behalf.

Tax Implications for Unmarried Couples

Stay informed on tax considerations that may impact unmarried couples, and explore strategies for reducing the tax burden:

• Inheritance Tax (IHT): Unlike married couples, unmarried couples do not benefit from the spouse exemption for IHT, which can lead to substantial tax liabilities. However, with proper estate planning and trust arrangements, you can mitigate some of these costs.
• Capital Gains Tax (CGT): Gifting assets between unmarried partners may be subject to CGT, depending on the asset value and appreciation. Consulting a tax professional can help minimise the potential tax impact on your estate planning strategies.
• Effective estate planning: With the support of professional will writing services like Sovereign Planning, you can structure your will and trusts effectively to minimise the overall tax burden on your estate and enhance your partner’s financial security.

Conclusion

Estate planning for unmarried couples is a vital aspect of securing your future together and protecting the interests of your partner. By creating a comprehensive will, establishing tailored trusts, and considering legally binding agreements for co-ownership and co-habitation, you can ensure that your partner is adequately provided for and that your assets are distributed according to your wishes.

Sovereign Planning’s professional will writing service offers expert guidance, adapting your estate plan to the unique challenges faced by unmarried couples. Their dedicated team is committed to helping you and your partner build a solid foundation for your shared future, providing peace of mind that your interests are duly protected.

Don’t leave your future to chance! Collaborate with Sovereign Planning’s skilled will writing professionals to create a tailored estate plan that’s designed to address the specific concerns and requirements of unmarried couples. Schedule your consultation today and explore the best options for protecting your shared assets and securing your future together. Contact us now to get started!