If you’re part of an unmarried couple – two people living together and sharing all the bonds of marriage except the legal one – you’re a part of a growing national trend. The marriage rate is continuing to decline in the U.S. as the number of unmarried couples cohabiting is on the increase.

Whether that sociological phenomenon is good or bad is a discussion for another time and place. But according to this recent article from Kiplinger, unmarried couples do need to be aware that they have to do some careful and deliberate estate planning to make sure all their affairs are handled in the way they want when one member of the couple passes away or leaves the household.

This warning is especially true for seniors living together. As the article, written by attorney David Handler, puts it, “Creating an estate plan for an unmarried couple is already challenging, but when the cohabitating couple are in their golden years, it’s especially tricky.” Let’s see what Handler is referring to.

Unmarried Couples: a Shifting American Landscape

It probably won’t surprise you to learn that the “landscape of relationships”, as Handler puts it, is changing all the time, and in an especially dramatic fashion over the past several decades.

Handler writes, “According to a study by the National Center for Family & Marriage Research, the marriage rate for U.S. women in 1970 was 76.5 percent, and today, it stands at 31 percent.”

He adds that this reflects a growing trend of couples choosing cohabitation over legal marriage, and that with that flexibility comes challenges. Especially in regards to estate planning.

Handler writes, “Couples establish families, acquire properties and even raise children outside of a conventional marriage. While this approach provides autonomy and flexibility, it presents distinct difficulties when creating an estate plan. From delineating property rights to crucial health care determinations, navigating estate planning for cohabitating couples, particularly those in their golden years, can be challenging.”

Unmarried Couples: More Autonomy, but With Major Limitations

Unmarried cohabitants do have an advantage over their married counterparts. They have far more individual autonomy in deciding how to distribute their assets.

“Contrary to those in a marital bond, there’s no legal obligation to leave anything to a partner,” Handler writes. “In many jurisdictions, the law mandates that significant portions of one’s assets be left to the surviving spouse. Such stipulations don’t apply to cohabiting couples who are not legally married.”

But advantages can have limitations, and in this case, it’s related to taxes. “From a tax perspective, assets directed to a surviving spouse are generally sheltered from estate taxes. For a non-spouse, transferring assets might attract significant estate taxes. Some couples might contemplate inter vivos gifts [gifts given while living] to their partner — typically made to children — to avoid substantial tax liabilities,” Handler explains.

He encourages unmarried couples to reflect on the following factors as they make long-term estate-planning decisions.

For Unmarried Couples, Real Estate Can Get Confusing

Handler warns that when it comes to real property, “the waters can get muddied.”

“Consider an unmarried individual acquiring a property solely under his name, excluding his partner to sidestep potential gift taxes,” he writes. “If he were to pass away, his partner might be left without any legitimate claim to that property.”

According to Handler, these types of situations emphasize “the importance of planning for property rights in estate plans, such as leaving the property to the partner, or to a trust for the partner’s use for life.”

Unmarried Couples and Medical Directives

Another delicate matter lies in the issue of medical decisions between unmarried partners. Without a designated health care proxy, legal decision-making often defaults to a lawful spouse or kin, regardless of the longevity of the unmarried relationship.

Handler warns that no matter how long you’ve been together, “a cohabiting partner would not automatically have any legal authority to obtain medical information or make medical decisions for the partner, or even have access to a hospitalized partner.”

He adds, “This makes instituting a health care power of attorney essential, ensuring the partner’s voice is heard in critical medical situations.”

Unmarried Couples and Blended Families

Combined families and assets can be a difficult mix, but are increasingly common these days. When former spouses or children from a prior relationship are involved, later-life cohabitating can be an emotional issue for both senior adults and adult children and requires careful navigation.

Handler writes, “If an individual chooses to remarry, prenuptial agreements become paramount, as children from previous unions may have apprehensions regarding their inheritances and perhaps the motives of the new spouse. However, prenuptial agreements are not an option for couples who choose not to legally wed.”

Bottom Line: Unmarried Couples Need Careful Planning

It may seem that forgoing marriage means a certain level of legal freedom, but as Handler notes, “it is not that simple.”

He concludes, “Cohabitation presents a progressive alternative to marital confines, but it demands a meticulous grasp of estate planning nuances, and couples must arm themselves with the requisite legal knowledge, ensuring their twilight years are as legally sound as they are emotionally fulfilling.”

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(originally reported at www.kiplinger.com)