Our friends at Ellen Williamson Law, PC discuss how more couples than ever share homes, finances, and lives without marrying. Many assume that putting both names on the house or the bank account handles most of what estate planning would. An estate planning lawyer can help unmarried couples create a plan that addresses their assets, financial interests, and wishes beyond what joint ownership provides. For unmarried couples, joint ownership can be a useful tool, but it doesn’t replace the protections the law gives spouses automatically, and it can create problems of its own.
What Marriage Provides That Partnership Doesn’t
The law builds in a number of protections for spouses. Unmarried partners generally get none of them by default:
- Inheritance. If a person dies without a will, intestacy laws in nearly every state leave property to relatives such as children, parents, or siblings, not to an unmarried partner, however long the relationship lasted.
- Decision-making. Many states give spouses priority to make medical decisions when no document names someone. An unmarried partner may have no standing at all.
- Tax treatment. Spouses can generally transfer unlimited amounts to each other free of gift and estate tax. Partners can’t.
- Retirement and survivor benefits. Spouses have certain rights in each other’s workplace retirement plans and may qualify for Social Security survivor benefits. Partners don’t.
Joint ownership addresses only one narrow piece of this: what happens to a particular asset.
Joint Ownership Can Be a Taxable Gift
Because partners don’t have the unlimited marital deduction, adding a partner to the deed of a house one person paid for can be a gift for federal tax purposes. If the value exceeds the annual exclusion, a gift tax return may be required. Tax is rarely owed thanks to the lifetime exemption, but the filing obligation still applies. The IRS gift tax FAQ covers the basics. Joint bank accounts work somewhat differently: a gift generally occurs when the non-contributing partner withdraws funds for their own use.
Survivorship Isn’t Automatic Everywhere
Whether a jointly owned asset passes to the surviving co-owner depends on how the title or account is set up and on state law. Some forms of ownership carry a right of survivorship. Others don’t, and the deceased partner’s share passes through their estate instead, potentially to relatives. Unmarried couples should confirm exactly how each asset is titled rather than assuming “joint” means “goes to the survivor.”
Breakups Are Harder to Untangle
When a married couple separates, divorce law provides a framework for dividing property. Unmarried couples don’t have one. If a jointly owned house is involved and the partners can’t agree, the path forward may be a partition lawsuit, and disputes over who contributed what can get complicated. A written cohabitation or property agreement, signed while the relationship is going well, can set expectations for ownership, expenses, and what happens if the relationship ends.
The Documents That Fill the Gaps
For partners who want to provide for each other, a coordinated plan typically includes:
- A will, and possibly a trust, naming the partner as a beneficiary.
- Beneficiary designations on retirement accounts and life insurance.
- A financial power of attorney and a medical power of attorney naming the partner.
- A HIPAA authorization so the partner can speak with healthcare providers.
These documents do work that joint titles can’t, including covering assets that aren’t jointly owned and giving a partner authority if the other becomes incapacitated.
The Bottom Line
For unmarried couples, joint ownership is one tool, not a plan. Partners who want the kind of protection spouses receive automatically need to create it deliberately, through careful titling, written agreements, and a full set of estate planning documents.
