Today’s families are a lot different than Ward and June Cleaver. There are more families today with non-traditional situations than ever before. It is very common in my profession to have clients with same sex marriages, second marriages with assets and children from a prior marriage, as well as families that may look traditional, yet marriage was never on the agenda. Financial and estate planning for everyone is important, but if the situation has any of the variables referenced above, planning is a must.
A recent article in The Patriot Ledger, titled "Estate planning for non-traditional relationships," takes a practical look at a common personal, financial and legal challenge.
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, not every couple these days combines their financial assets so that everything is owned jointly. Retirement accounts can’t be held jointly, so many families will keep separate asset ownership structures with dispositive plans at death or disability that give the assets to someone other than the surviving spouse.
Married Couples. If you have assets that are owned individually, these assets will be distributed according to your will, so there may be some time and expense in the probate process. If you want your assets to go to your survivor anyway, joint ownership may be the way to go. On the other hand, if you’ve got concerns about this, a trust may be better.
Second Marriages. You need to be very clear about who gets what after the first spouse passes. Don’t just settle this with a verbal agreement with your spouse. For example, do not rely on a verbal agreement for your spouse to “use” the assets after you pass and to then pass them along to your own children. It’s much better to create a trust. Your estate planning attorney can help you with this.
Cohabitation. For families that might appear to be “traditional” except for a marriage certificate, you can make any assumptions. Married couples, at least, have some state protection from disinheriting a spouse, however, that’s not the case in every state. For estate tax purposes, the original article explains that unmarried couples don’t have an unlimited deduction for leaving assets to a spouse. Remember, technically, the mother of your little Beaver or Wally isn’t your spouse. Also, without a solid will or trust, it’s possible your “partner” will only inherit some of the assets, and the rest to be given to your parents or siblings.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: The Patriot Ledger (Nov. 22, 2014) "Estate planning for non-traditional relationships"