Top 3 Legal Issues for Unmarried Couples
Living here in Southwest Florida, we all know unmarried couples who live together in loving and committed relationships but don’t intend to get married for myriad reasons. At the same time, they keep putting off creating an estate plan to protect each other for when “life happens.” I’d like to share a story with you of Bob and Sue, who represent a collage of clients I have had over the years and the dangers they face by not having a proper estate plan. Bob is divorced and moved from New Jersey to Florida eight years ago after retiring at the age of 67. He was renting a condo at the time he met Sue. Sue is a widow and moved from Ohio to Florida 10 years ago, owns a homesteaded, single-family home, and is the same age as Bob. They met at a local golf course, hit it off, and have been living together for the past seven years in Sue’s home. They have no plans of getting married and have no estate planning documents together, although Bob has a power of attorney and health care surrogate from his prior marriage naming his eldest son as his agent. Legal Issue No. 1 — Health Care One day, they are playing golf, and on a par three hole, Bob gets a hole in one! He gets excited and starts jumping up and down, and then, he begins to suffer chest pains and collapses on the course. He is rushed by ambulance to the hospital and placed into intensive care. Sue follows in her car, and when she gets to the hospital, they won’t let her see Bob because they are not married and she does not have a health care surrogate. Not only can’t she see him, but they can’t even disclose his medical condition to her. Sue has to call Bob’s son to let him know what has happened and has to ask him to call the hospital and call her back so she can know how Bob is doing. As horrible as the situation is for Sue, the hospital and doctor must comply with privacy laws. Legal Issue No. 2 — Government Benefits Bob fortunately recovers and, after a stint in rehab, goes back home to Sue’s house. As a couple, they are able to live comfortably on their Social Security income and small pension Sue receives from her late husband. Sue’s Social Security is $3,500 plus a $500 pension, and Bob only receives
$800 as he worked most of his career as a self-employed contractor underreporting his income to the IRS to save taxes. Sue also has about $127,000 in cash and investments, plus a new Lexus in her name she shares with Bob. After a couple of months, they get back on the golf course. On the second hole, they hear someone yell, “FOUR!” They both turn around to look and Sue gets struck in her right temple causing her to blackout. She gets rushed to the hospital and is put in intensive care. Now Bob can’t see her, and she has no documents appointing anyone to represent her. The prognosis is not good, and she will not be able to return home but will have to go into a nursing home as she suffered permanent brain damage and lost many of her motor functions and ability to communicate. Her daughter now has to go through the lengthy and expensive legal process of being appointed her guardian so she is authorized to make legal and medical decisions. While Bob asked the court to appoint him, the daughter has preference. The first issue with Medicaid benefits is that all of Sue’s income has to go pay for the nursing home, meaning that Bob only has $800 a month to live on. If they were married, he could apply to keep approximately $2,100 of Sue’s Social Security benefits to live on. Also, Sue is only able to keep her home, personal belongings, car, and $2,000 in other assets. Therefore, she will have to spend down $125,000 of her assets before she even qualifies for Medicaid. If they were married and Bob had a power of attorney, he could have transferred $125,000 to himself to protect the assets to pass to Sue’s daughter by creating an irrevocable special needs trust for the benefit of Sue. The next government benefit issue arises upon the death of Sue, who passed a year later. Since they were not married, Bob has no right to Sue’s Social Security benefit. If they were married, he would get her $3,500 and lose his $800. Now, he has only $800 to live on. Also, keep in mind, you have to be married at least nine months to qualify for a deceased spouse’s Social Security benefits.
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