Many types of relationships exist today that are not the typical nuclear family, defined as a husband and wife and their dependent children regarded as a basic social unit. It is very common for families to consist of same sex marriages, second marriages with assets and children from a prior marriage, as well as couples who co-habitat and raise children but never legally marry. Because of the ways our estate tax and probate laws are worded, it is vital that couples in non-traditional relationships establish well-thought out estate plans.
One of the first issues to address is that of asset ownership. A determination will need to be made for each asset whether to own it as an individual, jointly or via an entity like an LLC or trust. The way the asset is owned determines how it passes after death as well as how it is taxed. Considerations must also be made about how disability affects each asset.
Often in these situations, a trust can be created with custom applications for each situation that will ensure assets are protected and transferred according to the couple’s wishes. A trust is a legal document that can hold title to an asset, which allows for effective management of that asset by the trustee. A common tool is a revocable living trust that allows the person setting up the trust to be the trustee and beneficiary, so he or she continues to have complete control over the asset during his or her lifetime. Upon death, the trust terms determine the distribution and the distribution is made without any court probate process.
Not having a plan in place can leave a loved one disinherited and assets could pass by law to family members that you had not intended. For more information on estate planning for non-traditional couples in the Greater Baltimore area, please contact Stouffer Legal at 443-470-3599.