Have you noticed? Traditional American families are no longer the norm. Consequently, with the nature of family changing so has estate planning.
A recent article in The Patriot Ledger, titled "Estate planning for non-traditional relationships," takes a practical look at some common personal, financial and legal challenges when it comes to estate planning for non-traditional families.
Asset ownership. You can own assets in your own name, jointly, or in an entity like an LLC or a trust. The ownership issue determines things like taxes and even disposition through an estate or disability.
Unlike the Cleavers or Nelsons, not every non-traditional couple these days combines their financial assets so that everything is owned jointly.
Retirement accounts cannot be held jointly, therefore many non-traditional couples may elect to keep separate asset ownership structures with dispositive plans at death and make plans to distribute some assets to someone other than the surviving spouse/partner.
Second Marriages. You need to be very clear about who gets what after the first spouse passes. Do not rely on a verbal agreement with your spouse only. For example, do not rely on a verbal agreement for our spouse to “use” the assets after you pass and to then pass them along to your own children.
If you have any concerns about this, then it may be better to create a trust. Every situation is different, however, to include yours. The question is "who are you going to disinherit?" Your new spouse or your own children. Without careful planning, it will be one or the other.
Cohabitation. For families that might appear to be “traditional” but for a marriage certificate, you can make any assumptions. Married couples, at least, have some state protection from disinheriting a spouse. However, that is not the case in every state.
For estate tax purposes, the original article explains that unmarried couples do not have an unlimited deduction like married couples do. Remember, technically, the mother of your children is not your "spouse" unless you are married. Also, without joint ownership or a solid will or trust, it is possible your “partner” will not inherit your assets at all, and everything will be given to your children, or if none, to your parents or siblings.
Note: Kansas does have "common law" marriage, but this is not to be relied upon if you are the surviving "spouse".
Married Couples. What if you are in a traditional marriage? Are there still some snags for the unwary? Indeed there are.
If you have assets that are owned individually, these assets will be distributed according by joint ownership, your will, your trust or your beneficiary designations.
With probate there may be some time and expense in the probate process, but this is often overstated (especially by those running "trust mills") at steak-dinner-seminars for retirees.
If you want your assets go to your surviving spouse, then joint ownership is a common approach. On the other hand, you have many options and an experienced estate planning attorney can guide you.
In the end, estate planning must be done with great care and counsel from an experienced estate planning attorney if you are like the Cleavers or the Nelsons. This is doubly so if you are in a non-traditional family.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: The Patriot Ledger (Nov. 22, 2014) "Estate planning for non-traditional relationships"