Unmarried couples do not have legal protections enjoyed by married couples, such as automatic inheritance rights and the ability to make decisions should a spouse become incapacitated. Unmarried couples should take specific legal steps to ensure that their wishes have legal force:
Beneficiaries: You can designate beneficiaries for your bank, brokerage and retirement accounts; contact the financial institutions for the appropriate forms.
In the absence of a beneficiary designation or a will, the accounts will be distributed according to state law; your partner probably would not benefit. Another advantage to naming a beneficiary is that the account usually will not have to go through probate, the often-expensive court process that otherwise determines how an estate is distributed.
Real estate title: Adding an unmarried partner to a home's title as a joint tenant, with right of survivorship, helps ensure the partner will inherit the home should you die, and joint tenancy also avoids probate. But adding someone to a home's title can raise gift tax issues, although the IRS has not clarified the issue.
Durable powers of attorney: Each person needs two of these documents, one for health care and one for finances. The documents allow you to name someone to handle your affairs and make decisions for you should you become incapacitated. Otherwise, a judge may be required to appoint someone. Most lawyers who draft wills also draft durable powers of attorney; will-drafting kits and software also include the forms. Note: Many banks insist customers use the banks' power-of-attorney documents and refuse to accept others. Contact your bank to see whether special forms are required.
Wills: Unmarried partners do not have the automatic inheritance rights enjoyed by married couples. Without a will, state law determines who gets what, and a partner can be left penniless. Will kits and software provided by Nolo.com, a self-help legal publisher, can help those with small estates; people with estates worth more than about $500,000 should consult an attorney who specializes in estate planning. To find a certified estate planner, visit http://www.calbar.org or call your loca bar association.