Tying the Financial Knot: Unmarried Couples Need a Plan Too


Insights from research by Hugh Magill, Executive Vice President and Chief Fiduciary Officer at Northern Trust.

Your relationship may not be legally bound, but your estate plan should be.

Over the past few decades, the United States has seen a consistent decline in the number of couples opting to marry. However, this does not mean people are no longer in long-term relationships — many couples simply remain unmarried. “The marriage paradigm is changing. In previous generations, marriage was a cornerstone: Couples dated, got married, lived together, then had children. Today, couples may build a life together before they marry, making marriage a capstone experience,” says Hugh Magill, Northern Trust’s chief fiduciary officer and global director of Trust Services.

The Marriage Paradigm is Changing 1

Chart:Recent Relationship Trend Chart:Recent Relationship Trend Chart:Recent Relationship Trend

While cohabitation is a growing trend, current property and tax laws do not afford the same financial protections to domestic partners as they do to married couples. This is a significant issue, given the growing number of couples and children it impacts.

The number of adults cohabitating increased 29% from 2007 to 2016 2

While nearly half of all cohabiting adults are under 35, the percentage of cohabiters aged 50 and over is increasing.

Many Cohabiters remain in long-term relationships2

6 steps toward an estate plan for unmarried couples:

High-net-worth couples may have a mutual understanding of how they would manage each other’s wealth if their partner should pass, but they may not have an impetus (such as a prenuptial agreement) to put an estate plan in writing. Without a legally binding agreement, a judge cannot enforce their wishes. To avoid this situation, consider taking the following steps to ensure your intentions are fulfilled.

  1. Consider entering into a cohabitation agreement, in lieu of a prenuptial agreement, working with an attorney who has experience with these agreements.
  2. Discuss two difficult subjects – disability and death – and how each partner’s assets should be distributed in the event of death.
  3. Work with a skilled estate planning attorney to develop an estate plan that is consistent with each partner’s objectives.
  4. Carefully consider the tax implications of asset transfers, both those occurring during life and at death, in light of the fact that tax deductions available to married couples are not applicable to unmarried couples.
  5. Title assets and modify beneficiary designations to follow the provisions of each estate plan.
  6. Execute durable powers of attorney for healthcare and property.

Traditional family structures in the U.S. are clearly evolving , but most estate plan laws have not yet caught up. To ensure each partner is protected, unmarried couples should seek the guidance of attorneys and other advisors to build a successful strategy.

"Life is unpredictable. One of the most important gifts that we can leave our family is a thoughtful and carefully designed estate plan."

Hugh Magill

Chief Fiduciary Officer and Global Director of Trust Services, Northern Trust

  1. “Record Share of Americans Have Never Married,” Pew Research Center, 2014.
  2. “Number of U.S. Adults Cohabiting with a Partner Continues to Rise, Especially Among Those 50 and Older,” Pew Research Center, 2017.
  3. “Living Arrangements of Children Under 18 Years And Marital Status Of Parents, By Age, Sex, Race, And Hispanic Origin And Selected Characteristics Of The Child For All Children: 2016,” United States Census Bureau, 2016.
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This information is not intended to be and should not be treated as legal advice, investment advice or tax advice and is for informational purposes only. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel. All information discussed herein is current only as of the date appearing in this material and is subject to change at any time without notice.