Nowadays, fewer than half of the families in the United States are traditional nuclear families consisting of a father, mother, and their mutual children.
The term “non-traditional family” includes unmarried couples, either homosexual or heterosexual, with or without children. It may include a stepfamily, children from the prior marriages or relationships of one or both of the partners, and possibly mutual children of the couple.
Federal and Pennsylvania laws give married couples numerous rights, such as the right to handle funeral arrangements, rights under intestacy statutes, and Social Security survivor benefits. But unmarried couples do not have the benefit of laws governing the division of property or providing for support payments if their relationship breaks up. The children in unmarried relationships are especially vulnerable. Carefully drafted estate planning documents such as pre- and postnuptial agreements, wills, trusts, powers of attorney and health care proxies can alleviate the risks inherent in non-traditional relationships by designating a person or persons to step in when needed to make health care or financial decisions, by determining the division of property upon the dissolution of a relationship, and by defining the disposition of assets at the death of an unmarried partner.
Cohabitation Agreements
Unmarried couples who are living together have the option of creating a number of legal documents (often called “cohabitation agreements”) that can help protect their rights as a couple, while at the same time safeguarding their individual interests and assets. Since unmarried couples who live together may one day split up, especially outside of the legal bonds and social institution of marriage, it makes sense to plan ahead in order to avoid future conflicts.
Planning for incapacity
When one member of a non-traditional couple has been diagnosed with a debilitating disease, or has a health condition that affects his/her ability to function independently, proper planning can ensure that the incapacitated person’s wishes are carried out by the person of his/her choice. Certain documents should be prepared as soon as possible: a will, powers of attorney for health care and finances, and a living will. A revocable trust may be a more effective tool than a power of attorney for financial matters. If one partner has a revocable trust becomes incapacitated, the successor trustee can manage his/her financial affairs as the trust agreement directs. If the underwriting requirements can be met, purchasing long term care insurance may also be beneficial.
Grantor Retained Income Trusts (GRITs)
Grantor Retained Income Trusts (GRITs) are an estate planning vehicle used to transfer appreciating assets into an irrevocable trust for a term of years, retaining an income or other interest while naming others as remainder beneficiaries at the end of the trust term. This has the potential of removing wealth and future appreciation from the grantor’s estate, while still providing the grantor with income for the trust term. By law, GRITs cannot be used by families: a grantor’s spouse, ancestors, siblings, children and grandchildren — and their spouses — can no longer benefit from GRIT tax savings. The beneficiaries can be nieces and nephews or members of same-sex couples.