Estate Planning for the Non-Traditional Family
It's 2015, and let's face it; the idea of the "traditional family" has become very dated. Unfortunately, when it comes to putting together an estate plan, the laws still favor the "traditional family" as it existed back in the 1950s. If you have that, great; your plan will probably be easier to set up. But if it's not, there may be a lot more to think about.
If your family structure is non-traditional, you may derive comfort from numbers; you are in no way alone. In the United States, the number of households headed by married couples has been falling for years and continues to plummet. In 1990, the number was 55 percent, but by 2010, it was 48 percent. It's quite possible that number could rise when same-sex marriages are recognized everywhere, but there's no guarantee. Currently, despite the beautiful and hopeful wedding ceremonies we all see, around 40 percent of those happy newlyweds will divorce at some point and approximately 75 percent of them will remarry someone else. Of course, those marriages make up a large portion of those 48 percent of families headed by married couples, which makes "traditional" families a minority these days.
Tradition isn't coming back soon. More than a third of all births in the U.S. are to unmarried women. This can create numerous complications, especially whenn cases where the father is never identified, or the child was conceived using donated sperm. There is nothing "traditional" about any of that, and the lack of a second parent can make the need for planning more urgent.
If you find yourself in a non-traditional relationship of any kind, whether you're single and raising a child, single and own several large dogs, living with someone without getting married, whether your partner is the same or opposite sex, or you have been married multiple times, or have children by multiple partners, or any of a myriad number of other "non-traditional" family setups, you owe it to yourself to set up a plan that protects you and your loved ones in any situation. Here are a few considerations to think about:
- Give your unmarried partner rights. – In most jurisdictions, intestacy laws automatically pass property and cash to spouses when one spouse dies, or to children if they are related by blood or adopted.. Unfortunately, there are usually no provisions in place to protect unmarried partners or children who are not blood and have not been adopted. Setting up a comprehensive estate plan will make your intentions clear.
- Be careful to not give your new spouse too many rights – Quite often, people remarry, and things don't turn out as wonderful as they hoped. The children from the first marriage may not get along with those from the second, and your new wife may grow to loathe her stepchildren. Perhaps your parents liked your first wife and hate the second, and the feeling is mutual. If you die or become incapacitated without the documents needed to protect your first family and other loved ones, your second spouse could end up with control of your estate and cut everyone else off.
- Set up Trusts – While a will is an important instrument to create, they tend to be inflexible. For example, you may want your spouse to live in your house as long as they want, but you want the house to eventually go to specific children or grandchildren later on. Setting up a trust creates more options and allows you to plan in greater detail. It can allow you to make sure all of your children, your grandchildren, or even your favorite charity, are all taken care of according to your wishes by naming a trustee and giving them explicit instructions.
- Set up a pre-nuptial agreement – A pre-nup is not romantic or sexy, but when you are entering into your second marriage or later, especially if you have children from a previous marriage or other relationship, it is probably a necessity. Such couples have to discuss their mutual financial needs in the new relationship and balance that with the needs of the children from prior marriages and relationships, and then put that in writing, so there are no misunderstandings down the road. If circumstances change, you can always modify the agreement.
- Before planning, set goals – You can't just wing it. Before you set up an estate plan, you have to set out your goals first. If you're in a traditional family structure, there is more room for error. But if your family is non-traditional, there is little wiggle room. You have to know exactly what you want for each member of your extended or not-entirely-legally-recognized family. For example, if you were once married to a member of the opposite sex and had kids, but now you're living in a same-sex relationship with a wonderful person, you have to know your goals regarding your children, their other parent or parents and your current partner. List all of your goals first, before going in to see a qualified estate planning attorney to set up specific documents. Write them all down, and take them with you. While everyone should do this, it is especially important when a plan includes more family and non-family bonds. Such a plan has to balance and prioritize more interests.
The laws regarding distribution of property and rights in the event of incapacity are based on a tradition that barely exists anymore. There is no "norm" anymore, and you have to prepare for it.