The point of estate planning is to avoid confusion and disputes. There can be plenty of room for both in any relationship, but unmarried couples are especially vulnerable when it comes to plans for the disposition of property or care of dependents. Unmarried couples cannot presume legal protections or obligations for each other without careful planning.
Same sex couples, heterosexual couples who choose not to marry, and even nonsexual friends who live together and are economically interdependent would do well to formalize estate plans to make their intentions very clear. Failure to make a plan can lead to years of litigation and unintended harm to individuals who are already grieving.
De Facto or Not?
The situation is not limited to de facto couples, but that is the context in which disputes are most likely to arise. Australian law generally treats unmarried spouses in a de facto relationship in the same way that it treats married spouses. If one spouse dies without a will, the other is presumed to inherit. When a child or other claimant challenges the distribution to an unmarried partner, the question usually turns on whether a de facto relationship existed.
Courts in that situation are forced to examine the personal details of the relationship, including:
- Whether the parties were sharing a common residence,
- The length of the relationship.
- Whether a sexual relationship existed,
- The degree of financial interdependence,
- The degree of commitment to a shared life,
- Care and support of children,
- Joint ownership of property,
- Performance of household tasks and
- The manner in which members of the couple held themselves out to the public.
No one would willing go down this road. Keep in mind, as well, that the law recognizes the potential for multiple spouses or de facto spouses.
More Than a Will
At its most expansive, estate planning includes far more than a will. Properly understood, it extends to other arrangements including jointly owned property, beneficiary designations, guardianship arrangements for children, durable powers of attorney, healthcare directives and possibly even business succession arrangements.
The first step in estate planning is to make sure that any prior marriages and obligations to prior spouses have been dissolved. Former spouses should not be designated beneficiaries on life insurance or retirement plans unless required under the terms of a financial settlement agreement.
How an asset like the former family home is titled can be an issue for assets that pass outside of the terms of a trust or will, and these should be examined closely. Financial arrangements for a buyout may be necessary.
It may also be important to reexamine durable powers of attorney and healthcare directives. The thought of a former spouse making important financial or medical decisions in the place of a beloved unmarried partner is enough to give anyone pause.
What About Children?
Parties should take special care where either has children from another relationship. Especially when those children are minors or young adults who have not yet reached full financial independence, a court may determine that the deceased parent had a moral obligation to provide for their needs. Your solicitor should be involved in careful planning to ensure that those needs are met as required by law to avoid the possibility of a will contest.
The question can become even more complex when an unmarried spouse has had a long and active role in raising the other’s children, especially if the other biological parent has been absent. Provisions should be made to protect the children’s best interest in the event the unmarried spouse/parent dies. It might be wise to discuss adoption or guardianship arrangements as part of an estate plan.
Jointly Owned Businesses
Unmarried couples who find themselves in business with each other should carefully review corporate succession plans in the event one or the other dies. An unprotected spouse could easily find him or herself both bereaved and without a livelihood.
If either owner were to die without a will, the business might cease to function and provide an income to survivors or employees while in probate. If either member of the couple has an SMSF, it is also important to consult with an attorney about the purposes and limits of a Binding Death Nomination.
A comprehensive estate plan is a good idea for any couple, but it is especially necessary for unmarried couples. At Owen Hodge Lawyers, we would welcome the opportunity to help you craft a plan that accurately reflects your intentions and protects the people you love. Call us at 1800 770 780 or contact us via [email protected] to schedule a consultation with our experienced estate planning lawyers.