Ashlea Ebeling catalogs the legal exposures unwed cohabiting couples face on death, disability, and separation — and the three documents that close the worst of the gaps.
The problem: intestacy laws in nearly every state assume a spouse. Cohabiting partners, regardless of length of relationship, inherit nothing by default. A partner's family can claim the house, the 401(k), even the dog.
The Three Documents
Ebeling walks through: (1) a will or revocable trust naming the partner, (2) beneficiary designations on all retirement accounts and life insurance — which override a will, and (3) durable power of attorney and health-care directives so the partner can act in an emergency.
She notes the single most common failure: forgetting to update a 401(k) beneficiary after a divorce, leaving the ex-spouse as the named recipient. The plan administrator is required to follow the form on file, not the intent of the deceased.
For Our Clients
Nearly every cohabiting client conversation this year has surfaced at least one of these three documents missing. For public-employee clients with CalSTRS or CalPERS, the stakes are compounded: the survivor benefit election is permanent at retirement.
What This Means For Our Portfolios
- This is a direct planning-agenda item. Every cohabiting client gets the three-document review this quarter. No exceptions.
- CalSTRS/CalPERS clients: review survivor-election forms before the retirement date. The “Option A” election cannot be reversed.
- Life insurance opportunity. Partner-owned policies are the cleanest solution for unwed couples — avoids probate, delivers cash, covers the mortgage on day one. Nationwide VUL Protector II fits the pattern we have been running.
- Not portfolio-level, but revenue-level. Every three-document review that converts to a life insurance placement is $200/month of premium — 55–70% FYC.