Pennsylvania law provides significant automatic protections for married couples: inheritance rights, spousal shares of the estate, healthcare decision-making authority, and favorable tax treatment. Unmarried couples, regardless of how long they have been together, receive none of these protections. Without deliberate estate planning, your partner could be left with no legal right to your assets, no authority to make medical decisions on your behalf, and a substantial tax bill on anything you do manage to leave them.
We work with unmarried couples throughout Western Pennsylvania who are surprised to learn how exposed they are. The good news is that virtually all of these gaps can be addressed with proper planning. Here is what you need to know.
No Automatic Inheritance Rights
Under Pennsylvania's intestacy statute (20 Pa.C.S. Section 2102), if you die without a will, your assets pass to your spouse, children, parents, siblings, and more distant relatives, in that order. An unmarried partner is not included anywhere in the statutory hierarchy. If you die without a will, your partner receives nothing from your estate, even if you have lived together for decades, own a home together, or have built a life as a family.
Pennsylvania abolished common-law marriage for relationships formed after January 1, 2005. If your relationship began after that date, you cannot claim common-law marriage status regardless of how long you have cohabited.
The solution is straightforward: you must have a will that explicitly names your partner as a beneficiary. Without one, the law treats your partner as a legal stranger.
The 15% Inheritance Tax Problem
Even with a will, unmarried partners face a significant financial disadvantage. Pennsylvania's inheritance tax rates are based on the relationship between the decedent and the beneficiary. Spouses pay 0%. Children pay 4.5%. Siblings pay 12%. Everyone else, including unmarried partners, pays 15%.
On a $500,000 inheritance, the tax for an unmarried partner is $75,000. For a surviving spouse inheriting the same amount, the tax is zero.
This tax applies to virtually everything you leave your partner: real estate, bank accounts, investments, personal property, and retirement accounts. It is one of the highest inheritance tax rates in the country for a domestic partner, and it is a cost that married couples avoid entirely.
While you cannot eliminate the 15% rate through estate planning alone, you can structure your plan to minimize the total tax burden:
Life insurance. Proceeds from a life insurance policy payable to a named beneficiary are exempt from Pennsylvania inheritance tax. This is one of the most powerful tools available to unmarried couples. If you want to leave your partner $500,000, purchasing a life insurance policy with your partner as the beneficiary achieves that goal with zero inheritance tax. The premiums you pay during your lifetime are not subject to the tax.
Irrevocable trusts. Assets transferred to an irrevocable trust more than one year before death may be excluded from the inheritance tax base, provided the grantor retained no prohibited interests. This requires advance planning and permanent loss of control over the assets, but the tax savings for a partner who would otherwise face a 15% rate can be substantial.
Joint ownership with right of survivorship. Property held as joint tenants with right of survivorship passes automatically to the surviving owner at death. However, for unmarried couples, the decedent's share of jointly held property is still subject to inheritance tax at the 15% rate. Joint ownership avoids probate but does not avoid the tax.
Healthcare Decision-Making
If you are incapacitated and cannot make your own medical decisions, who makes them for you? For married couples, Pennsylvania law provides a default hierarchy that places the spouse first. For unmarried couples, the default hierarchy skips to adult children, then parents, then siblings, meaning your partner may have no legal authority to make critical healthcare decisions for you.
A healthcare power of attorney (also called a healthcare proxy or healthcare directive) solves this problem. This document names your partner as your agent for healthcare decisions, giving them the legal authority to consult with your doctors, access your medical records, make treatment decisions, and, if necessary, make end-of-life decisions on your behalf.
Without this document, your partner may be excluded from your hospital room, denied information about your condition, and overruled by family members who may not share your wishes. We have seen this happen. It is preventable.
Every unmarried couple should have healthcare powers of attorney naming each other, signed and notarized, and kept in an accessible location.
Financial Power of Attorney
A financial power of attorney authorizes your partner to manage your financial affairs if you are unable to do so. This includes paying bills, managing bank accounts, filing tax returns, handling insurance claims, and making investment decisions.
Without a financial power of attorney, your partner cannot access your individual bank accounts, pay your mortgage, or manage your finances during a period of incapacity. A family member or court-appointed guardian would need to step in, and your partner may be excluded from those decisions entirely.
Property Titling
How you hold title to your home matters enormously for unmarried couples. The three most common forms of ownership are:
Sole ownership. If the property is titled in one partner's name alone, the other partner has no legal interest in it. If the owner dies, the property passes through the owner's estate (subject to the will or intestacy rules). The non-owner partner has no right to remain in the home.
Tenants in common. Each partner owns a defined share of the property (typically 50%). If one partner dies, their share passes through their estate. It does not automatically transfer to the surviving partner unless the will directs it. The deceased partner's share is subject to inheritance tax.
Joint tenants with right of survivorship. Each partner has an equal undivided interest, and when one dies, the entire property automatically passes to the survivor. This avoids probate for the property, but the decedent's half is still subject to the 15% inheritance tax. For a home valued at $400,000, the tax on the decedent's $200,000 share would be $30,000.
For most unmarried couples, joint tenancy with right of survivorship is the preferred form of ownership, combined with life insurance to cover the inheritance tax liability on the transfer.
Retirement Accounts and Beneficiary Designations
Unmarried partners should name each other as beneficiaries on retirement accounts, life insurance policies, and any other accounts that allow beneficiary designations. However, there is an important difference from married couples: a surviving spouse can roll over an inherited IRA into their own IRA and defer distributions. An unmarried partner cannot. Under the SECURE Act, a non-spouse beneficiary must withdraw the entire balance of an inherited IRA within 10 years of the account owner's death.
This accelerated distribution requirement increases the income tax burden on inherited retirement accounts for unmarried partners. Planning around this may involve Roth conversions during the account owner's lifetime, which shifts the tax burden to the present and allows the inherited Roth IRA to grow tax-free during the 10-year distribution period.
Building a Complete Plan
Estate planning for unmarried couples is not more difficult than for married couples, but it requires more deliberate action because nothing happens automatically. A comprehensive plan for an unmarried couple should include wills naming each other, healthcare powers of attorney, financial powers of attorney, coordinated beneficiary designations, appropriate property titling, and life insurance to offset the inheritance tax burden.
At Ament Law Group, we work with unmarried couples throughout Western Pennsylvania to create estate plans that provide the legal protections the law does not automatically grant. Call (724) 733-3500 or schedule a consultation.
Related resources:
- Understanding Pennsylvania Inheritance Tax
- Understanding Powers of Attorney in Pennsylvania
- How to Create a Will in Pennsylvania
- Estate Planning Services
- Schedule a Free Consultation
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