Estate Planning for Unmarried Couples in California: Key Considerations

Estate planning is an essential consideration for all couples, but it holds particular significance for those who are unmarried. In California, where 8.9% of all couples are unmarried as of the latest census, understanding the legal landscape is crucial for protecting one's assets and ensuring their proper distribution (Source: U.S. Census Bureau). For unmarried couples, the lack of legal recognition can complicate the situation, making deliberate estate planning an imperative step.

1. Property Ownership

Actionable Tip: Unmarried couples should consider holding property as joint tenants with the right of survivorship. This arrangement ensures that upon the death of one partner, the entire property automatically passes to the surviving partner without the need for probate.

Mistake to Avoid: Avoid holding property as tenants in common unless there is a clear, legally documented plan about what happens to each person's share upon their passing. Without this, each partner's share may be distributed according to state laws, possibly to unintended heirs.

2. Wills and Trusts

Actionable Tip: Each partner should draft a will specifying how they wish their personal assets to be handled and distributed. For even greater control, consider setting up a trust, which can help manage assets during one's lifetime and distribute them posthumously.

Mistake to Avoid: Neglecting to create a will or trust can lead to assets being distributed according to the state's intestacy laws, which do not recognize unmarried partners. This often results in assets passing to biological family members rather than to an unmarried partner.

3. Powers of Attorney and Health Care Directives

Actionable Tip: Establish a durable power of attorney for finances and a separate one for healthcare. These documents ensure that each partner has the legal authority to make important decisions should the other become incapacitated.

Mistake to Avoid: Failing to have these documents can result in the necessity of court intervention, which can be costly, time-consuming, and stressful during an already difficult time.

4. Retirement Accounts and Life Insurance

Actionable Tip: Designate each other as beneficiaries on retirement accounts and life insurance policies. This action is straightforward but profoundly impactful, ensuring that benefits from these accounts are transferred directly to the surviving partner without probate.

Mistake to Avoid: Assuming that beneficiary designations are automatically set or don't need updating. Always confirm and update these designations to reflect current relationships, especially after significant life changes.

Case Law and Statutes

Under California Probate Code Section 6401(c), if a person dies without a will, a surviving spouse may inherit all or a large portion of the deceased's property. This law, however, does not recognize unmarried couples. In the case of Estate of Wilson (1985), it was held that cohabitation without formal marriage does not grant the surviving partner estate rights reserved for spouses.

Fictional Example to Illustrate a Point

Consider Jane and John, an unmarried couple living together in California for 15 years. They owned a house, but only John's name was on the deed. John assumed Jane would inherit the house if something happened to him, so he never formalized it in a will. When John unexpectedly passed away, his estranged siblings inherited the house, and Jane, with no legal claim, was evicted.

Additional Considerations for Same-Sex Couples

Fictional Example to Illustrate a Point

Let's consider the case of Alex and Sam, a same-sex couple who have been in a committed relationship for over a decade. Living in California, they share a home and a life together but have never formalized their relationship through marriage or domestic partnership. They assume that their dedication to each other is enough to ensure they would take care of one another's affairs should anything happen. Unfortunately, without legal marriage or an estate plan, their assumption doesn't hold in the eyes of the law. One day, Alex suffers a severe illness and becomes incapacitated. Sam, assuming he will be allowed to make medical decisions for Alex, is shocked when the hospital staff denies his requests. Legally, Sam isn't recognized as the decision-maker because they lack a healthcare directive naming him as the agent. Furthermore, since they aren't married and Alex doesn't have a will, Sam faces the distressing possibility that Alex's estranged family members might inherit the home he and Alex shared, potentially leaving Sam with no legal rights to the property. This example underscores the critical importance for same-sex couples, especially those who are unmarried, to establish a comprehensive estate plan. This should include drafting wills, creating healthcare directives, and ensuring proper beneficiary designations are in place to protect each other's interests and ensure their rights are preserved, regardless of marital status.

Estate Planning for Unmarried Couples with Joint Children

Actionable Tip: Unmarried couples with children should ensure that they have a comprehensive estate plan that includes the nomination of a guardian for their children. This is crucial because, in the event of the death of one parent, the surviving parent will naturally retain custody unless deemed unfit. However, specifying a guardian in estate documents can provide an additional layer of security and clarity in more complex family situations or where both parents might pass away simultaneously.

Mistake to Avoid: A common oversight is assuming that the surviving parent will automatically take care of the children's inheritance. To protect the children's financial future, it is advisable to set up trusts in their names, specifying how and when the assets will be distributed. This can prevent mismanagement of the inheritance and ensure that the children's needs are met according to the deceased parent's wishes.

Legal Framework and Guardianship

Under California law, if a parent dies without naming a guardian in a will, the court will appoint someone considered suitable. However, this process can be lengthy and contentious, potentially leading to outcomes that might not align with the deceased parent's desires. According to California Family Code §3040, when making a decision about guardianship, the court prioritizes the welfare of the child, considering several factors including the child's health, safety, and welfare, the nature and amount of contact with both parents, and, importantly, any established patterns of care.

Fictional Example to Illustrate a Point

Emma and Lucas are an unmarried couple with a young daughter, Mia. Though deeply in love, they never felt the need to marry or formalize their relationship legally. They both assumed that should anything happen to one of them, the other would naturally continue to care for Mia. However, when Lucas died unexpectedly in a car accident, his parents contested Emma's fitness as a mother, aiming to gain custody of Mia, partly because they disapproved of Emma's lifestyle choices. The court proceedings were emotionally draining and complicated because Lucas had not specified his wishes in a legally binding document. If Lucas had established a clear guardianship directive in his estate planning, this dispute could have been minimized or avoided, ensuring Mia's stable upbringing by her mother, as he would have intended.

Action Steps:

For unmarried couples in California, especially those with children, it is vital to address estate planning comprehensively to protect not only each other but also their children. Establishing guardianship, setting up trusts, and ensuring all legal documents are in place can prevent unnecessary hardship and legal battles during already challenging times.

Conclusion

Estate planning for unmarried couples in California requires careful consideration and proactive legal steps. Without these, partners risk leaving their loved one unprotected and legally powerless in the event of an untimely death or incapacitation. For those residing in Aliso Viejo, Orange County, or anywhere in California, securing experienced legal help is crucial. The Law Office of James Burns, with over 24 years of experience in estate planning, can provide the necessary expertise and peace of mind. Don't leave your future to chance. Contact the Law Office of James Burns today at (949) 305-8642 or visit www.jamesburnslaw.com to ensure your wishes are honored and your loved ones cared for, no matter what tomorrow brings.