ESTATE PLANNING AND UNMARRIED PARTNERS

As an attorney, I often find it difficult to impress upon my clients the extreme importance of planning for death. Death however, isn't sexy or even mildly pleasant and as such, documents that assist in planning for it aren't exactly prioritized purchases, so to speak. Death is unfortunately, a guarantee. Given this, one would think that estate planning would be at the top of just about everyone's "to do" list. Guess what? It's not. In my experience, people spend more time, money and effort painting their homes or redecorating the kitchen. Many couples don't even begin to contemplate any form of estate planning until there are children in the mix and they are faced with the decision of choosing guardians for the kids. This, even when there are substantial assets, tax issues or complicated familial issues to consider.

Unlike married couples, unmarried couples-same sex or otherwise-have more pressing problems at stake when it comes to estate planning. Unmarried couples (or for lack of better phraseology, "non-traditional couples") should have Wills where they specifically choose the beneficiaries of their estate-just like anybody else. If a person passes away without a Will, the courts determine the ultimate beneficiaries by utilizing the laws of intestacy. The rules of intestacy generally pass assets to biological relatives. In the case of an unmarried couple (and in the absence of a Will or Trust), the assets pass to remote relatives before passing to a significant other.

In the case of an unmarried couple with a hefty amount of assets, there are also important tax implications to ponder. Unmarried couples are not entitled to the same tax benefits as a married couple, specifically (when it comes to estate planning), the unlimited marital deduction. The unlimited marital deduction allows unlimited, tax-free transfers between spouses. This can significantly lessen the impact of taxes imposed upon death, thereby preserving more wealth for the spouse and descendants. Thus, in addition to Wills, attorneys need to draft more sophisticated types of documents for wealthier couples in this type of situation.

Unmarried couples also need to be astute about who've they designated as beneficiaries of 401ks, life insurance policies and the like. They also need to be certain they've named someone to take care of their finances in the event of incapacity. Perhaps more importantly, they need to name an individual to make health care decisions on their behalf in the event of incapacity. It is very likely that a hospital will defer to the decisions of family members over an unrelated partner in the absence of a health care power of attorney.

In addition to naming guardians in the Will, there should be other agreements in place with respect to any children. Often times, as is often the case with same-sex partnerships, one parent is the legal parent and the other partner has no legal rights to that child at the end of the relationship or upon death.

It is worth mentioning that some unmarried couples can also plan for the division of shared assets for the time in which they are living together as a couple. They can memorialize how their assets will be disbursed should the relationship come to a natural end. This is most often accomplished via some form of domestic partnership agreement, which of course should be drafted by an attorney.

Bear in mind that every state is different and also, that this discussion is by no means exhaustive. No amount of advice I can provide in an article is a substitute for a consult with an attorney and an accountant familiar with both the individual client and the laws in his or her jurisdiction.

Learn more about this author, Beth Tanous.
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