ESTATE PLANNING FOR BLENDED FAMILIES, SAME-SEX COUPLES, AND UNMARRIED COUPLES.
December 28th, 2018 | Joseph E. Kluger
For “traditional” families, estate planning is a proven method of preserving and distributing assets. “For ‘blended’ families, such as unmarried couples and same-sex couples, estate planning is absolutely essential”, notes HKQ Law Attorney Joseph Kluger. Nowhere is the need for careful thought, attention and professional guidance more important than in lifetime planning for the distribution of assets following the death of a family member.
In cases where there is a person who passes away without a Will, the assets of the deceased person (the Decedent) pass as directed by Pennsylvania intestate laws, an outcome that may be entirely inconsistent with what the Decedent expected or intended.
In summary, intestate succession provides as follows:
- If the Decedent has a Surviving Spouse, but is not survived by either issue or parents, the Surviving Spouse will receive all of the Decedent’s probate assets. But if the Decedent is survived by issue, or if not by issue but by parents, then the Decedent’s probate assets are divided between the Surviving Spouse, who receives the first $30,000 and one-half the balance of the probate assets, and the remaining balance passes to Decedent’s issue, or if none survive, then to Decedent’s surviving parents. However, if the Decedent is survived by issue one or more of whom are the children of only the Decedent, then the Decedent’s probate assets are divided between the Surviving Spouse, who receives one-half the balance of the probate assets, and the Decedent’s surviving issue share one-half of the balance of the probate assets.
- If the Decedent has no Surviving Spouse, the Decedent’s estate passes to the Decedent’s family in the following order of priority as set forth in the intestate law: (a) first to issue, (b) if no issue survive Decedent, then to Decedent’s parents, (c) if no parents survive the Decedent, then to the issue of the Decedent’s deceased parents (brothers and sisters or their issue), (d) if no issue of deceased parents survive the Decedent, then to the Decedent’s grandparents (generally divided equally between maternal and paternal grandparents and, if deceased, to their surviving issue), (e) if there are no persons surviving within the grandparent class, then to uncles, aunts and their children, and grandchildren, and (f) if none of the foregoing are living, the Decedent’s probate assets pass to the Commonwealth of Pennsylvania.
For issue to inherit from a Decedent under the laws of intestacy, the person must be a Decedent’s issue from a legal standpoint. Children who are adopted qualify as issue of a Decedent. However, stepchildren do not qualify. Under the Pennsylvania intestate law, a stepchild of a Decedent would not be able to inherit probate assets. This situation, which may create unintended consequences for both traditional and blended families, can be remedied by utilizing a Will.
Unmarried couples must also rely on Wills to ensure their probate estate assets pass as they expect and desire, as the state’s intestate law does not make provisions for such couples. Keep in mind that Pennsylvania common-law marriages are legally binding if entered into prior to 2005, the year those marriages were abolished. (In addition to Wills, unmarried couples may utilize cohabitation agreements which fairly divide assets and property if and when the relationship comes to an end.)
Prior to Pennsylvania’s ban on same-sex marriage being ruled unconstitutional in 2014, a surviving partner would not be entitled to an inheritance if his or her partner died without a Will. Now the surviving spouse has the right to receive an intestate share, although a Will is still recommended. Many same-sex couples previously used life insurance to avoid the consequences of the intestate law, as well the state’s 15% inheritance tax. This is no longer necessary since all assets pass to a same-sex spouse free of the Pennsylvania Inheritance Tax, but the distribution of assets would still be subject to the intestate law in the absence of a Will.
The recognition of same-sex couples also enables such couples to hold real estate as “tenants by the entirety.” This title ensures that upon the death of one spouse the property automatically passes to the surviving spouse, and of course eliminates the application of the intestate law. It also provides protection against creditors.
While Wills are arguably the most important component of an estate plan, there are a number of other methods which can be utilized to help people in non-traditional relationships achieve their specific goals. These methods include:
- Gift planning
- Financial Powers of Attorney
- Healthcare Powers of Attorney
- Living wills
- Long-term health care and Medicaid planning
A Power of Attorney enables a person (the “principal”) to grant legal authority to another person to make property, financial and other legal decisions for the principal.
A Health Care Power of Attorney gives an agent the authority to make health care decisions for you if you are unable to communicate such decisions.
A living will provides specific instructions about what medical treatments should or should not be performed for end of life situations.
Long-term care expenses can be covered by Medicare, insurance, private payment, Veteran’s benefits or Medicaid. With Medicaid planning, you may be able to qualify for Medicaid more quickly.
Gift planning can help eliminate or reduce gift taxes as you make gifts to assist family members while you are living.
Trusts facilitate the transfer of legal ownership of property to a person or an institution to manage the property for the benefit of another person.
To discuss your unique estate planning with an experienced HKQ Law attorney, call (800) 760-1LAW (1529).