5 estate planning tips for the non-traditional family (which probably means yours)
Is your family of the “Leave It to Beaver” variety—opposite-gender parents, first marriage for each, one or more kids? If so, your estate plan will probably be straightforward. But if not, you have a lot of company and your estate plan will likely involve complications. Certainly, the Cleavers' estate plan would be much less complicated than planning for my clients, who often have been married more than once. According to U.S. News, in 2014, 40 percent of all new marriages involve a person who has been married before. Remarriage, some report, is actually on the rise.
In 2014, the National Center For Health Statistics reported that approximately 40 percent of babies were born to unmarried women. If you are in a relationship, but not married, or if you have been married more than once or have children by more than one partner, then it is critical that you do estate planning. Here are a few tips to consider:
•Give your partner rights. The so-called "intestacy laws" provide that, when a person dies without a will, the person’s property will pass to spouses and/or children, or to parents if someone dies without a spouse or children. But no laws protect unmarried partners or unadopted children. As a result, if an unmarried partner becomes incapacitated or dies without wills, trusts or powers of attorneys, the partner will be left without protection under the law. Perhaps the unmarried partner could petition a court for a determination of common-law marriage, but that is expensive and difficult to prove. Common law marriage must be established by “clear and convincing” evidence, a very high legal standard.
•But carefully consider giving the new spouse too many rights. All too often, despite the best intentions, when parents remarry the new family fails to bond. The children from prior relationships don't grow close to one another or with the new spouse. Frequently, whether intentional or not, the death of one spouse results in the assets of both families residing with the surviving spouse, ultimately passing to his or her children, leaving the children of the first spouse hurt and resentful. Frank discussions with an estate planning attorney about what the couple wants can prevent misunderstandings and unintended consequences. Again, wills, trusts and powers of attorney can permit the new couple to choose the outcome they prefer, rather than just letting life, death and resentment happen.
•Don't be afraid of pre-nuptial agreements. While most people enter a first marriage without children and assets, this is not the case with a second or third marriage. Before remarrying, the couple needs to discuss whether they plan to financially support one another and/or their children from prior relationships. Then the couple needs to document their agreement to ensure it is followed and enforced. If circumstances change, the couple can always modify their agreement. The couple also needs to consider that the government will ignore pre-nuptial agreements when a spouse requests Medicaid benefits for long term care. For this reason, when my married clients wish to keep their assets separate, I advise them to consider long term care insurance.
•Use trusts. Unlike wills, trusts can facilitate more long range planning for a couple and their assets. For example, a trust can permit a widow to live in her husband’s home for her lifetime but ultimately pass the home to the husband’s children and grandchildren. Alternatively, a couple can pool their resources into a joint trust for their benefit during their lives with any remaining funds distributing equally to the children of either spouse.
•Goals first, planning second. Anyone considering planning, whether in a traditional or non-traditional relationship, needs to start by with goals. Is your primary concern to provide for yourself? What about your partner/spouse? Is it important to leave an inheritance to children? Grandchildren? Do you want to provide for just your children or for the children of your spouse, too? Discuss with an estate planning attorney whether all goals are achievable or if goals need to be prioritized. Ultimately, the estate plan should reflect the couple’s goals and priorities. While this is true for anyone doing estate planning, it is more important for couples with children from different unions because the plan must balance and prioritize more interests.
The bottom line is that our laws for distribution of property and rights upon incapacity are based on a vision of a marriage between one woman and one man with children. Since this view of “family” is much less the norm today, planning is more important and difficult. Don't put it off. Make a resolution to complete a comprehensive estate plan.
Attorney Macrina G. Hjerpe is a partner in the Providence law firm Chace Ruttenberg & Freedman. She practices in the areas of Estate Planning, Probate, Estate Administration, Trust Administration, Trust Litigation, Guardianship, Business Succession Planning, Asset Protection Planning, Elder Law and Estate Litigation.