Estate Planning Concerns for Domestic Partners
The Basics
Most people avoid addressing their estate planning needs it because they feel that they will have plenty of time to get an estate plan or they do not feel as though they have an estate to protect. Yet, the reality of life is that we never know when we will utilize our estate plan and everyone needs one regardless of estate size.
Estate planning in its simplest terms is passing your assets to your heirs as quickly and tax free as possible. Assets can be transferred via Wills, ownership, by contract (beneficiary arrangements), and trusts. The best way to ensure that you have everything covered is to meet with an attorney.
Regardless of the complexity of your financial situation, your attorney will most likely start you with a basic estate plan. The basic estate plan typically includes the drafting of your Will, Powers of Attorney for Health Care and Finances, as well as Living Wills.
I have encountered many excuses for not having a Will: my estate isn’t large enough; everyone knows who should get my belongings; and so on. These are all simply that- excuses. If you do not have a Will, the probate court creates one for you. As a result, parents, siblings, and possibly even cousins could receive preferential treatment over your partner, friends, and favorite charity.
When most of us think of estate planning, we often neglect to think about those areas that can help us while alive. Powers of Attorney allow someone else to make decisions on your behalf if you cannot. These documents, drafted with your basic estate plan, spell out the decisions that someone else can make for you and the circumstances in which they can. For instance, if you were in intensive care, you might not have the capability to make your own medical decisions. Normally this decision would fall to a spouse or close family member, but because you and your partner are legally married, hospitals may not even allow him/her into the emergency room or ICU. By designating a Power of Attorney for medical care, your partner can make the decisions necessary for your recovery.
Additionally, while in the hospital, you may want to have someone managing your investments and paying your bills. Your Power of Attorney for finances may be the same person or a different person as your Power of Attorney for health care. In creating both, take your time to carefully select the person with whom you plan to place your physical and financial well being. I also recommend appointing a contingent or back-up person in the event that your first choice is unable or unwilling to make those decisions.
Even with Powers of Attorney in place, institutions in or out of your state may decline to accept them. My recommendation is to check with your primary care physician to ensure that he/she will take your forms and to make him/her aware of your intentions. Additionally, many financial institutions may only accept their own forms. As a result, I also recommend talking to your bank and financial advisor about your intentions.
The incidents that surrounded Terri Schiavo’s final years, months, and days have illustrated the importance of Living Wills. Regardless of your desire to be kept alive or allowed to die, you want make your wishes known in writing. As part of your estate plan, make your wishes crystal clear through a Living Will.
If you know of anyone who has passed away, you may have seen his/her family coming out of the woodwork to lay claim to valuables. Many families, who are supportive of your relationship in life, may become very greedy or spiteful after you pass away. This can tear families apart. Even if you are single, don’t let this happen with your estate.
While not technically an estate planning vehicle, I recommend that all of my domestic partner clients look into a partnership agreement. Because gays and lesbians cannot legally marry (in most states), there is not a divorce procedure in place within our court systems should your relationship end. A partnership agreement spells out the ownership of all assets (including valuables inside your home) and how to separate those assets should you and your partner separate.
I have worked with couples who had partnership agreements and those who did not take my advice. Those who separated and had the agreement felt the financial portion of the separation went relatively well. Those who separated without the agreement went through legal battles, gave up a greater amount of their assets than they may have otherwise, or their ex took everything and only left the debt. Do not be fooled into thinking that every relationship will last forever or that it will end well. Sadly, not all relationships last forever and many end poorly.
For those of you who might have been married or through a civil union in another state or country, you may want to continue to plan as though that never occurred. It is terrible to say, but unless you intend on being a legal pioneer, your best bet might be to play it safe until current regulations have been changed.
The most important piece of estate planning is getting one in place. Meet with an attorney, your financial advisor, and accountant to determine the best course of action for your estate. Review your beneficiaries on a regular basis. You will also want to update your estate plan every five to seven years or when you have a significant life change, a beneficiary passes away, or if estate/income tax laws change.
This article is for informational purposes only and is not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.
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