Estate Planning and the Legal Quirks of Retiree Cohabitation
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.


The landscape of relationships has seen a significant shift over the past several decades.
According to a study by the National Center for Family & Marriage Research, the marriage rate in 1970 was 76.5%, and today, it stands at 31%. These days, an increasing number of couples at all stages of life are choosing the path of cohabitation over the legal binds of marriage, but with that flexibility comes challenges, especially regarding estate planning.
Long-term cohabitation without the bounds of matrimony is now a common lifestyle decision. 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.

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Autonomy and its implications
For unmarried cohabitants, there's an advantage: the autonomy in dictating the distribution of one's assets. Contrary to those in a marital bond, there's no legal obligation to leave anything to a partner. 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.
Yet, this independence has its own set of limitations. 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 to their partner — typically made to children — to avoid substantial tax liabilities.
Other factors to keep in mind:
Real property. 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. If he were to pass away, his partner might be left without any legitimate claim to that property. Such circumstances 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.
Medical directives. Beyond real property and other assets is the even more delicate matter of medical decisions. Legal decision-making might default to a lawful spouse or kin without a designated health care proxy. Regardless of the relationship's longevity, 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. This makes instituting a health care power of attorney essential, ensuring the partner's voice is heard in critical medical situations.
Blending families and finances. Modern unions often mesh the intricacies of combined families and assets. For those with former spouses or children from a prior relationship, deciding to cohabitate later in life can invoke many emotions and concerns of the children. 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.
While forgoing marriage is a way to sidestep legalities, it is not that simple. 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.
Related Content
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- What to Discuss With Your Aging Parents as They Get Older
- Three Overlooked Benefits of Estate Planning
- Estate Planning Amid Family Estrangement: Limiting the Fallout
- Uncertain Times Call for Creative Estate Planning Strategies
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David A. Handler is a partner in the Trusts and Estates Practice Group of Kirkland & Ellis LLP. He concentrates his practice on trust and estate planning and administration, representing owners of closely held businesses, family offices, principals of private equity and venture capital funds, individuals and families of significant wealth, and establishing and administering private foundations and other charitable organizations.
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