No two people are alike, and no two families are alike. More often families are being created and shaped in non-traditional ways and continue change the way we think of families, such as single parent families, blended families, same-sex households, and children as caregivers for aging parents. In a way, non-traditional families are more the norm than the exception.
According to the U.S. Census Bureau, from 2008 to 2019, the total number of same sex households in the U.S. increased 80% from approximately 540,000 to 980,000. Additionally, according the Current Population Survey, the living arrangements of children in the U.S. is changing—with the number of children living with two parents down from approximately 85% in the 1960s to 70% currently. Lastly, according to Generations United, the number of Americans living in multigenerational households increased from 7% to 26%—an increase of 271% in a decade. It is clear that the families of today do not look like the families of our past.
Everyone wants to take care of their family—and estate planning is a huge piece of that. When it comes to estate planning, it is generally described as the conservation and distribution of property, assets, and wealth in the manner that most efficiently and effectively accomplishes one’s goals. Estate planning is inherently a goal-oriented activity—using tools, techniques, and actions to achieve certain goals. Naturally, questions often arise for non-traditional families around estate planning. How should these families handle estate planning? What are their unique challenges? What aspects of an estate plan should be focused on? However, more often than not, a non-traditional family has the same goals and wishes for estate planning as a traditional family—to protect and distribute their assets in the way they want to. So, while estate planning for non-traditional families comes with a few unique issues, it follows the same path—state your family’s goals and wishes; make a plan to achieve those goals; and then take action toward those goals.
It is worth noting that generally federal and state estate laws are based on the “traditional” family structure rather than the wide range of non-traditional family structures. This generally means that traditional families are more likely to benefit from and be protected by federal and state laws. For instance, a state may have a law that leaves all of a spouse’s property to his/her surviving spouse if he/she dies without a will. However, a non-spouse partner may not be afforded those same benefits and protections under state or federal law. Additionally, non-married partners may not take advantage of the unlimited gift tax deduction that is provided to spouses.
While it is unquestioned that non-traditional families have some unique circumstances that require thoughtful and creative planning, there seem to be only a few differences between traditional family and non-traditional family estate planning.
- Non-traditional families may not be provided the same tax, gift, and estate benefits and therefore must be more meticulous and careful when making material financial decisions.
- For example, the transfer of property between non-married partners may be a taxable event and should be careful considered before carrying out.
- For example, non-traditional families may need to specifically name their beneficiaries by legal name rather than a generic class description such as “my children” because even though you may consider someone your “child,” the law may not.
- For example, a blended, second family may have numerous beneficiaries they wish to provide some benefit, so the value of benefit may need to be reduced to each beneficiary in order to be spread around evenly.
So, while non-traditional families definitely face unique challenges when it comes to estate planning, they, just like traditional families, can create a plan that can accomplish their goals. And whether it’s a traditional or non-traditional family, estate planning can be done by taking a few small, but meaningful actions (with the help of legal, financial, and tax advisors) to implement their estate plan. Some steps include reviewing and updating beneficiary designations on retirement accounts and life insurance policies, reviewing how assets such as real estate and vehicles are titled, having a durable power of attorney for someone to make decisions for you if you become incapacitated, and executing a will that names a guardian for minors if necessary and directs how and to whom property and assets will pass upon the death of the individual. To review, a non-traditional family can create a comprehensive estate plan that meets all of their goals and wishes much in the same way a traditional family would. Of course, a non-traditional family’s unique circumstances and concerns will require careful planning with the helpful of trusted advisors.
Disclaimer: The information provided is for educational purposes only and not intended to provide any investment, tax or legal advice. Some of the information in this article is provided through linked websites. Links on this website are for informational purposes only. We do not endorse the content nor the products of these linked websites.