Marriage: When You’d Rather Not

Same-sex couples planning for a long-term commitment need to have the right estate planning documents in place, whether they are married or not.

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Since gay marriage was legalized in 2015, same-sex couples have had the same rights as their opposite sex counterparts when it comes to tying their financial lives together. All couples can now take advantage of tax benefits for married partners, pass assets from one spouse to another with ease and qualify for Social Security spousal and survivor benefits. However, not all couples want to get married. Others have remarried and haven’t updated their estate planning documents. Here are things same-sex couples need to consider:

Write a Will

A will is especially urgent for same-sex couples who don’t have children, since there is no assumed heir, says Sharon Klein, executive vice president at Wilmington Trust, a wealth management firm. Couples may decide that they want their funds to go to charity after they die, or their chosen family. To do so with the least amount of interference from the state, each partner needs a will that’s updated regularly to reflect life events or changes in your wishes.

Depending on where you live, a basic will costs between $200 to $500. If you die without a will, a court will decide how your assets will be distributed, based on your state’s succession laws. In general, if you’re unmarried, the court will distribute your property to your relatives—your parents, for example, if they’re still living, and then your siblings. Assets won’t pass to your partner unless you have a will.

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In addition to a will, you’ll need other estate-planning basics, including a financial power of attorney and a health care proxy for both partners. This is especially true for couples who have chosen to not get married. Unless you have these documents in place, medical or other professionals may not allow your partner to make decisions on your behalf if you become incapacitated, turning instead to your next of kin. For same-sex couples whose families disprove of the relationship, things can get testy. (A similar situation could also arise in an opposite sex long-term partnership.)

Update Your Beneficiaries

Accounts that have named beneficiaries, such as your bank, retirement, and brokerage accounts, aren’t bound by the conditions of your will. Instead, they’ll pass directly to your beneficiaries when you die. That’s why it’s critically important to make sure your beneficiaries are up to date. And both partners should do this after every life change, such as a death, marriage, break-up or divorce.

For example, suppose you’re remarried. If you die without updating your beneficiaries, your money could go to your ex.

This gets especially tricky for same-sex couples with children. If the biological parent dies, the money will go to the children. However, when the non-biological parent passes away, the money could end up going to other relatives if the child or children aren’t named as beneficiaries. Even if the non-biological parent adopts the children, they still should check named beneficiaries. If you don’t name any beneficiary on your account—or that beneficiary has passed—the money will go to next of kin, which could be a child, parent or sibling.

Other Financial Issues to Tackle

If you and your partner own a home, you also need to take steps to protect both of your interests, and that usually involves consulting an attorney, says Mari Adam, a certified financial planner. You should put in writing how much each of you invested, who’s responsible for paying the mortgage, how to split the money if the house is sold, and who has the right to live there if you split up or one partner dies or becomes disabled, she says. “Otherwise, if the house is in just one person’s name, the partner may not have any right to continue living there and could get evicted by the owner or their family.”

Rivan V. Stinson
Ex-staff writer, Kiplinger's Personal Finance

Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher. She is currently assistant editor, personal finance at The Washington Post.