Generally speaking, estate planning laws were designed for the traditional nuclear family, a married couple with kids.
But according to the 2010 U.S. Census, such families are less than 50 percent of the total. Non-traditional families, including single parents, blended families and unwed partners, need to pay particular attention to their estate plans to avoid unwanted consequences.
If you die without a will, your assets will be distributed according to your state’s default laws. If you’re not married, these laws indicate that your assets are passed on to your heirs at law, such as children, parents or siblings.
Consider wills, trusts, power of attorney for property, and power of attorney for healthcare to designate whom you want to step in for you if you’re incapacitated and who should receive property after your death. Take a look at how your assets are titled as well as your beneficiary designations. These will also impact how your assets are distributed after your death.
Title property with care
Ensure that real estate is titled appropriately, consistent with your wishes and instructions. Titling issues are especially important if you are unmarried and want your partner to continue living in the property after you die.
Protect a partner and the next generation
For blended families, consider ways to protect your spouse’s quality of life into retirement while still providing assets to your children after your spouse’s death. Otherwise, all your assets could transfer to your spouse, and then ultimately to his or her children. Trusts are one option to give your spouse rights to received assets for his or her “health, education and maintenance” and leaving that balance to your children.
Talk with an attorney who focuses in estate planning about planning strategies that can benefit unmarried couples and other non-traditional families. Arrangements can be made for retirement plans, estate taxes, wills, real estate, and powers of attorney.