As mentioned in a previous post, once an adult starts working and accumulating assets, even if they’re simply a car and nice living room furniture, he or she also needs to start protecting their livelihood. The same holds twice as true for young couples.* Couples sometimes erroneously believe that they don’t need to protect themselves or their relationship until they get married, enter into a Civil Union, or have children. However, just like working single adults need protection, so do “young” couples. Therefore, once a decision to reside in one household as a loving and committed couple is made, the documents previously discussed – powers of attorney and life insurance – should be revisited to reflect this relationship.
Moreover, depending on the legal status of the relationship, or the lack thereof, legally documenting your agreement about your assets is very important. For example, in Illinois, if you’re cohabiting, your relationship lacks legal recognition except by contract. Therefore, an agreement to share expenses and property is the bare minimum of what is required to at least document your relationship and its affect on your assets. Additionally, ensuring your testamentary documents – a valid will and trust – reflect your intentions toward your partner and the rest of your family is equally important.
If a cohabiting partner dies intestate (without a will), unlike the surviving partner in a Civil Union or legally married couple, the surviving cohabiting partner will have no rights under Illinois laws. However, the next of kin to the deceased will have rights. Therefore, unless a document, such a shared expense and property agreement, is in place with mounds of receipts and statements providing supporting evidence of the agreement, the surviving partner will have no way of retaining assets that were obtained as a couple.
Still, even with this agreement in place, the decedent’s relatives may still challenge by asserting their rights to inheritance under Illinois’ intestacy laws. Thus, to prevent a possible brouhaha, it’s advisable to have at least a valid will prepared, designating your partner as a beneficiary. But remember, because a will is public – see Whitney Houston’s will – your family gets to see who gets what. And if you have an evil twin who doesn’t like what he or she sees, the brouhaha will not be averted. So then what?
You might have a revocable living trust prepared. Trusts are private – you can’t see what Michael Jackson left – and become irrevocable upon the grantor’s (trust maker’s) death.
Civil Union and legally married couples are more fortunate than cohabiting couples with a caveat for Civil Union couples. The right to inherit and renounce bequests are generally universal rights for spouses through the U.S. and Civil Union couples typically have all the rights of spouses. However, Civil Union couples are not recognized in all states, so spousal rights are not available, placing them in the same position as cohabiting partners in unfriendly states.
So for couples without children and without consideration for probate proceedings, the most basic ways to protect your relationships may resemble this: