Estate planning is crucial for unmarried couples in New Jersey, as they lack many of the legal protections automatically granted to married couples. Without proper planning, partners may find themselves unable to make important decisions for each other or inherit assets as intended. Let’s explore the key aspects of estate planning for unmarried couples in the Garden State.
What is an Estate Plan for an Unmarried Couple?
An estate plan for an unmarried couple is a set of legal documents that outline how assets should be distributed and decisions made if one partner becomes incapacitated or passes away. In New Jersey, this typically includes wills, trusts, powers of attorney, and healthcare directives[3].
Why Estate Planning for Unmarried Couples is Crucial
Estate planning is particularly important for unmarried couples in New Jersey because:
- The state doesn’t recognize common law marriage.
- Intestacy laws don’t include unmarried partners as beneficiaries.
- Without legal documentation, partners have no say in medical or financial decisions[3].
How to Start Creating an Estate Plan
To begin estate planning:
- Take inventory of your assets.
- Discuss your wishes with your partner.
- Consult with a New Jersey estate planning attorney.
- Draft necessary documents like wills, trusts, and powers of attorney.
Differences Between Married Couples and Unmarried Couples in Planning
In New Jersey, married couples enjoy certain benefits that unmarried couples don’t:
- Automatic inheritance rights
- Ability to make medical decisions for an incapacitated spouse
- Tax benefits on inherited property
Unmarried couples must create explicit legal arrangements to achieve similar protections.
How Can Unmarried Couples Designate a Beneficiary?
Understanding Beneficiary Designations
Unmarried couples in New Jersey can designate each other as beneficiaries on:
- Life insurance policies
- Retirement accounts
- Bank accounts
- Investment accounts[5]
Common Beneficiary Mistakes to Avoid
- Forgetting to update beneficiaries after major life changes
- Naming minors as direct beneficiaries
- Failing to name contingent beneficiaries
What are the Benefits of a Trust for Unmarried Couples?
Trusts offer several advantages for unmarried couples in New Jersey:
- Avoid probate
- Maintain privacy
- Provide for a partner while protecting assets for children from previous relationships[5]
Types of Trusts Suitable for Unmarried Partners
- Revocable Living Trusts
- Irrevocable Trusts
- Asset Protection Trusts
Setting Up a Revocable Living Trust
A revocable living trust allows you to:
- Transfer assets into the trust
- Manage assets during your lifetime
- Specify how assets should be distributed after death[5]
Role of a Trustee in Managing Assets
The trustee:
- Manages trust assets
- Makes distributions according to trust terms
- Has a fiduciary duty to act in the best interests of beneficiaries
How Does Joint Ownership Work for Unmarried Couples?
Exploring Property Rights and Joint Tenants
In New Jersey, unmarried couples can own property as:
- Tenants in common
- Joint tenants with rights of survivorship[3]
Understanding Joint Tenants with Rights of Survivorship
This form of ownership:
- Allows property to pass directly to the surviving partner
- Avoids probate for the jointly owned asset[3]
Legal Implications of Joint Ownership
- Both partners have equal rights to the property
- Creditors of one partner may have claims on the property
- May complicate estate planning for children from previous relationships
Why is a Power of Attorney Essential for Unmarried Couples?
The Importance of Durable Power of Attorney
A durable power of attorney allows your partner to:
- Manage your finances if you’re incapacitated
- Make important decisions on your behalf[3]
Choosing the Right Proxy for Decision-Making
Consider:
- Your partner’s ability to handle financial matters
- Their understanding of your wishes
- Their willingness to take on the responsibility
Health Care Directive and Proxy Considerations
In New Jersey, unmarried partners should have:
- A healthcare power of attorney
- A living will
- HIPAA authorization forms[3]
These documents ensure your partner can make medical decisions and access your health information if needed.
By creating a comprehensive estate plan, unmarried couples in New Jersey can protect their rights, ensure their wishes are respected, and provide for each other in the event of incapacity or death. It’s wise to consult with a local estate planning attorney to tailor your plan to New Jersey’s specific laws and your unique situation.
Citations: [3] https://www.superlawyers.com/resources/family-law/new-jersey/how-to-protect-yourself-if-youre-cohabiting-in-new-jersey/ [5] https://info.wealthcounsel.com/blog/estate-planning-considerations-for-unmarried-couples
