Estate Planning

Estate Planning: In a Relationship

A growing number of unmarried couples in same-sex or heterosexual relationships are signing cohabitation agreements.  These cohabitation agreements cover how assets will be divided if they break up and sometimes include promises to provide for each other through an estate plan. The problem is most states do not have laws explicitly recognizing such agreements—meaning blood relatives could challenge the survivor’s rights.

For this reason alone it is far better to record your wishes in a Will. If you are worried blood relatives might object, consider using a living trust as part of your estate plan, because it’s harder for them to challenge. Like a Will, a living trust spells out who gets your stuff when you die, but the assets in the trust avoid probate—the process through which a court determines that a Will is valid. For a trust to work correctly, however, you must title your assets in the trust’s name (known as funding the trust).

Incapacity

If you want your significant other (and not relatives) to make health decisions for you, make sure to update your health care power of attorney. And, if you want your significant other to make decisions regarding your property, update your durable power of attorney.

Joint Property

Buying a house together? Pay attention to how it’s titled. For example, if you own it as “joint tenants with rights of survivorship” and one owner dies, the other automatically gets the whole house. But for tax purposes, the entire property will be included in the estate of the first to die, which could trigger state or even federal estate taxes on the whole property (not likely for most because the current exemption is $5.25 million). Alternatively, you might hold the property as “tenants in common”; if one owner dies, just that person’s share gets included in his estate. In this setup, if you want your share to pass to your partner you must say so explicitly in a Will, or it could go to your parents, forcing your significant other to move.

Twenty-two states and Washington, D.C. have their own estate and/or inheritance taxes, and some are levied on relatively small amounts left to a non-spouse. So consult a lawyer about the best way to own (and pass on) property.

About the Author
North Little Rock Arkansas Bankruptcy Lawyer Brandon Haubert

Brandon M. Haubert – North Little Rock Arkansas Bankruptcy Lawyer

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Business Address: 1 Riverfront Pl STE 745, North Little Rock, AR 72114 Hours: Monday – Friday: 8:30AM – 5PM Phone: (501) 263-2422 North Little Rock Bankruptcy Attorney Brandon M. Haubert Brandon Haubert is a top-rated bankruptcy attorney here in North Little Rock (rated one of the Top 40 Under 40 by The National Advocates); he and the team at wh…

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