Last time, we looked at estate planning for unmarried couples, that is, how to transfer assets to the other person after one partner died.
This time we are looking at what steps to take to insure that the partner is able to handle the affairs of the other person during their lifetime.
One point I made in the previous post was that I don’t think that under most circumstances it is a good idea to put the other person on as a co-owner of property; be it real estate, or any sort of financial account. People like to do this because they want the other person to have access to it during their lifetime and also to provide that the other person gets the property after the first persons death. The basic problem with this is, the other person becomes an owner of the property at the time they are named an owner; which means they can close out the account, take the money, or sell the property. Additionally, if they should get in financial trouble, whether through credit cards, an automobile accident, or medical bills, those creditors (people who are owed money) may be able to take the money or the asset that they are co-owners of to pay the debt. Obviously, this is not what most people want or expect; they will put a loved one on as co-owner of an account, or real property, thinking that it will make it easier for that person to manage the property or deal with the property after the first persons death, and then it comes as a very unpleasant surprise to find that someone the second person owes money to has come and seized the property to pay a bill.
One reasonable compromise is, if you have what I call a “day to day” account, for instance a checking account that you keep a relatively small balance in, for paying of day to day expenses such as groceries, and the light bill, to name the other person as a co-owner of that account and only that account. They will be able to pay routine bills and the most you would have at risk is the amount in the checking account at any one time; so long as you could afford to lose that amount if something were to happen, that may be reasonable. Just make sure that this doesn’t represent all or a large part of your life savings.