Preparing your will and taking care of related estate planning and documentation is a must for every adult, especially if you have a family. In some cases, traditional family relationships dictate who inherits your assets and makes the probate process easy.
But what happens if your family is non-traditional, as many families are these days? A recent article in Kiplinger talked about what steps people with non-traditional families should take while estate planning and preparing wills and advance directives such as living wills and durable powers of attorney.
We want our Addition Financial members to understand how to protect themselves and their families. Here’s what you need to know.
Non-Traditional Families
As of 2021, only about 19% of American families qualify as traditional. For the purposes of estate planning, a traditional family consists of married parents and biological children who, if the children are underage, live under the same roof.
The umbrella for non-traditional families is much larger and may include:
- Cohabitating couples
- Divorced couples
- Blended families
- Intentionally single parents
- Adoptive, step, or foster families
- Same-sex couples
- Families caring for aging parents
- Grandparents raising grandchildren (or aunts and uncles raising nieces and nephews, etc.)
If your family fits any of these descriptions, it’s essential to create estate documents that protect your family.
Make a List of Financial Goals
Financial goals associated with your estate may seem clear to you but your job is to make sure they’re clear to everyone else, including the courts. If your will is vague, it may be open to misinterpretation.
The example given in the Kiplinger article was of grandparents who wanted to pay for their grandson’s college education. The issue? He wasn’t their biological grandson, but rather, he was their daughter’s stepson. Their existing will left money to their grandchildren but did not specifically include step grandchildren.
Your goals might include:
- Leaving money to your children and grandchildren
- Setting aside money for the care of a disabled child or an elderly parent
- Creating trusts to hold money on behalf of minor children
If you want money to go to minor children, your best bet is to create a revocable trust. That way, you can get around legal limitations on how much money you can leave to a minor child. For example, in Florida, amounts less than $15,000 may be paid to a child’s guardians, but amounts over $15,000 must be placed in a trust.
Put Legal Protections in Place for Unmarried Partners
What happens if you live with someone but you’re not married? In Florida, the law does not recognize common law marriages and grants almost no legal rights to cohabiting couples.
That means if you share a home but not a marriage license, your estate planning must put mechanisms in place that will allow your partner to:
- Visit you in the hospital or intensive care
- Participate in end-of-life decision making
- Inherit your property
- Keep property you owned together
Joint ownership of assets can go a long way toward protecting your partner, but you should still have a will, living will and power of attorney if you want your partner to make decisions on your behalf. You may also want to consider a revocable trust, which will allow your partner to avoid probate.
Protected Children Who Aren’t Biologically or Legally Yours
Biological children are automatically considered to be heirs if you die without a will. The same is true of legally adopted children. However, the story is different if you have step children whom you haven’t adopted, foster children or any child in your guardianship who is not legally your child.
The most important thing you need to know is that you’ll need to be specific if you want to leave money or care financially for children who aren’t biologically or legally yours. That means spelling out who they are and what you want them to have.
Because these issues may be complex, we recommend hiring an attorney to draw up your will and related documents. People who write their own wills are more likely to make mistakes that could leave stepchildren or foster children without their intended inheritance.
Don’t Leave Anything to Chance
One of the biggest mistakes people make when preparing a will is assuming that one of their heirs will “know what to do” to care for aging parents or stepchildren. Assumptions won’t hold up in court and there’s no way to tell how someone will interpret your wishes – which is why you shouldn’t leave anything to chance.
If your intention is to leave money to an adult son and have him give money to your stepchildren from a second marriage, you need to set up documentation that makes that intention clear. Ideally, the matter shouldn’t be left in the adult son’s hands. Instead, the money for your stepchildren should be placed in trust for them. If you choose, you may have your son act as trustee.
The key here is to spell out your wishes clearly and put mechanisms in place to ensure they’re carried out. The same is true if you want to leave money to care for your aging parents or a disabled older child. The more specific you are, the more likely it is that your wishes will prevail.
Be Honest About Your Plans
Our final word of advice is to be open with the people in your non-traditional family about the disposition of your assets and what they’ll be getting when you die. There’s nothing to be gained by being secretive or cagey about your wishes.
The complexities of non-traditional estate planning are such that you should engage the services of an experienced estate attorney to help you spell out your wishes, draft your will and advance directives, and put other legal paperwork in place to create revocable trusts.
Protecting your family – no matter what it looks like or who you include – is an essential part of estate planning. The advice we’ve included here will help you identify your goals, create your will and other documents, and ensure that your wishes are carried out when you die.
