How Cohabitation Complicates Texas Estate Planning

More and more Texas couples are choosing to cohabitate without getting married. For older couples, this arrangement is often intended to protect assets for their children. Couples should be aware that cohabitation can affect estate planning in unexpected ways, however. With the right trusts and estate planning lawyer, cohabitating couples can navigate these pitfalls with ease.

The Major Difference in Inheritance

A key difference between a cohabitating and married couple in terms of estate planning is the effect of one partner’s death on inheritance. In the case of a married couple, a surviving spouse automatically maintains an interest in her deceased spouse’s estate, even if the decedent did not leave a will. In the case of an unmarried, cohabitating couple, however, a surviving partner lacks any default legal interest in their deceased partner’s estate. In other words, the surviving partner will not inherit any part of the estate unless a will is in place designating the survivor as a beneficiary.

This rule holds true even in cases where the surviving partner contributed financially to an asset he/she did not technically own, such as making mortgage payments on a house in the partner’s name. In this example, the surviving spouse’s ability to claim an interest in the home would be substantially limited.

Insurance and Long Term Care Benefits

Another important consideration for cohabitating couples involves medical insurance. Cohabitating without marriage can have a variety of effects on health insurance, especially pertaining to long term care eligibility. For example, to obtain Medicaid in Texas, an otherwise qualified individual must generally have less than $2,000 in assets. There are exceptions to this rule, however, that allow married people to obtain Medicaid even if they technically have far greater than $2,000 in assets.

Take, for example, the case of a married couple where one partner has to be moved to a long term care facility and the other remains at home (in the community). This so-called community spouse Medicaid exemption will permit the couple to keep a certain portion of their total assets while still retaining the institutionalized partner’s Medicaid benefits. This Medicaid rule does not apply to unmarried couples who were cohabitating prior to one partner’s institutionalization, however.

Fortunately, cohabitating couples no longer have to worry about disparate treatment in terms of an inheritance tax, since Texas repealed that tax in 2015. Nonetheless, the impact of cohabitating without marriage on estate planning, however, is not to be overlooked. Cohabitating couples can obtain a better understanding of their rights as well as options for estate planning by working with a qualified trust and estate planning law firm.

Speak to a Texas Trusts and Estates Lawyer Today

If you are in a cohabitating relationship and wish to include your partner in your plans for your estate, contact the Houston estate planning law firm of McCulloch & Miller, PLLC right away. Our dedicated team of attorneys can help you identify the pitfalls of cohabitation on estate planning and guide you through the planning process so that you and your partner are both protected in the future. A bit of effort now can prevent avoidable hassle in the future. Call us at 713-333-8900 to schedule a consultation with an experienced trusts and estates lawyer today.


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