California Estate and Elder Law Helps to Understand Estate Planning Options
· What special challenges do unmarried couples have in planning their estates?
The unlimited marital deduction applies only to couples deemed married under state law, making it harder to eliminate estate tax on the death of the first partner of an unmarried couple. One method of paying federal estate tax is to purchase life insurance on each person, using the proceeds to pay the estate tax.
· My partner and I are not married, but we regard each other as the equivalent of a spouse. Do we have any special planning needs?
Because the law treats married couples differently from unmarried couples, and because society makes certain assumptions when dealing with a spouse, you and your partner do, indeed, have special planning needs. First, consider carefully what powers and authority you want to give each other during a period of mental incapacity and after death. Then ensure, through a competent attorney, that you each have legally enforceable documents granting those powers and authority. Some states have presumptive statutes that make this difficult because family members are favored over others.
Second, consider writing a letter to those family members who might legally or practically presume that they will be in charge of you and your affairs in the event of mental incapacity and after your death. The letter should explain what you have done and why, and it should request that they not interfere with your wishes.
· My life partner and I are concerned about what will happen should one of us become incapacitated or die. Neither of our families is truly accepting of our relationship. What can we do to protect what we have?
The marriage contract imposes certain rights and obligations on a husband and wife. Such obligations include the duty to support each other and provide necessaries; in some states, there is protection from disinheritance, and so on. In the absence of such a marriage contract, the partners must fashion their own agreement.
These agreements are sometimes called living-together agreements or prenuptial agreements. They are enforceable as contracts provided that they are supported by “fair and adequate consideration,” which, in this context, generally means that there is full disclosure between the partners. Such agreements can cover almost anything the couple considers important, such as ownership of particular items of property used in the household; how jointly acquired assets are to be divided in the event of a breakup; and each partner’s obligation, if any, with respect to supporting a disabled or even unemployed partner, and for how long. Each partner should expect to carry disability income insurance and health insurance.
To protect one another in the event of incompetence or death, each of you should consider living trust—based planning, with cross designation of one another in representative capacities. This will enable each of you to retain control over your joint estate and be involved in the decision-making process. Your living trusts can also handle property distribution on death to avoid probate.
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