Estate planning critical for non-traditional couples

Generally speaking, estate planning laws were designed for the traditional nuclear family, a married couple with kids.

But according to the 2010 U.S. Census, such families are less than 50 percent of the total. Non-traditional families, including single parents, blended families and unwed partners, need to pay particular attention to their estate plans to avoid unwanted consequences.

If you die without a will, your assets will be distributed according to your state’s default laws. If you’re not married, these laws indicate that your assets are passed on to your next of kin, such as children, parents or siblings.

Consider wills, trusts, a durable power of attorney, and healthcare proxies to designate whom you want to step in for you if you’re incapacitated and who should receive property after your death. Take a look at how your assets are titled as well as your beneficiary designations. These will also impact how your assets are distributed after your death.

Title property with care

Ensure that family real estate is titled appropriately, consistent with your wishes and instructions in your will. Titling issues are especially important if you are unmarried and want your partner to continue living in the property after you die.

Two titling options include tenants in common (TIC) and joint tenants with rights of survivorship (JTWROS). When a property is held as a TIC, each owner holds an interest. When one owner dies, that interest passes to an heir, per his or her estate plan. That means your partner could end up as a joint owner with your children or siblings. With JTWROS, on the other hand, property automatically transfers to the surviving owner.

Protect a partner and the next generation

For blended families, consider ways to protect your spouse’s quality of life into retirement while still providing assets to your children after your spouse’s death. Otherwise, all your assets could transfer to your spouse, and then ultimately to his or her children. Trusts are one option to give your spouse rights while still setting aside assets for the next generation.

Alternately, a couple may pool their resources into a joint trust. Any remaining assets could be distributed to all your children equally after you’ve both died.

Talk with an estate planning attorney about other planning strategies that can benefit unmarried couples and other non-traditional families. Arrangements can be made for retirement plans, estate taxes, wills, real estate, and healthcare powers of attorney