Prior to discussing estate planning for non-traditional couples, it is important to understand that we agree on a common definition for a traditional couple. The notion of a “traditional couple” has advanced over recent years. Until as recently as 2015, same-sex couples could not legally marry, which from an estate planning perspective, meant that a lot of extra planning was necessary. This is no longer the case following the Supreme Courts’ decision in Obergefell v. Hodges which held that same-sex couples had the fundamental right to marriage in all 50 states.
Accordingly, for purposes of this article, I am going to define a traditional couple as a relationship between two married individuals who are in their first marriage and the only children are children of the marriage. Estate planning for traditional couples usually consists of having a Will, Financial Power of Attorney, Health Care Power of Attorney and Advanced Health Care Directive. Many people will also set up a revocable living trust to avoid probate.
The traditional plan itself usually consists of each spouse leaving money to the other (occasionally in trust for tax planning purposes). On the death of the surviving spouse, everything is left to the children. The surviving spouse is usually executor and trustee of any trusts. If a traditional couple does not create a Will, the state’s intestacy scheme will send the money in the same direction – but without any trust or tax planning.
When I use the term “non-traditional couple,” I am referring to all family units other than couples in their first marriage with children only between the two of them. There are typically two types of couples that need estate planning significantly different from that of traditional couples:
- Couples where at least one party has children from a previous relationship (often called “Blended Families”)
- Couples who are in a long-term relationship but are not legally married
For all non-traditional couples it is even more important to prepare Wills, Financial Powers of Attorney, Health Care Powers of Attorney and Advanced Health Care Directives. However, while the documents stay the same, the methodology is very different.
For Blended Families, many of the traditional planning techniques do not work because the goal is not always to provide for the spouse first and then for the children. A custom estate plan is needed to ensure that both the needs of the surviving spouse and children from the prior relationship are addressed. This often involves setting up irrevocable life insurance trusts or segregating assets.
For couples who are in a long-term relationship but are not legally married, planning is imperative to ensure that their wishes are carried out. Without the proper estate planning documents, a person’s life partner will have no rights to administer their loved one’s estate or act as a guardian. By executing a proper estate plan, unmarried couples can guarantee that their partner will be the one to benefit from their estate.
The reason custom planning is required for unmarried couples is because most states have additional taxes that can be minimized or avoided with proper planning. Additionally, it is often helpful to create a custom plan to ensure privacy.
With the assistance of a competent estate planning attorney, you can create a plan that will help your loved ones avoid a complicated estate administration process, litigation and higher taxes after you pass away. If you are in a non-traditional relationship, I strongly recommend seeing an attorney in a jurisdiction near you to flush out all the issues that affect you.