Accountancy Resources
For the first time in census history, the minority of households consist of married couples. Slightly more than half, about 111 million households making up 50.2% of the population are in some other type of living arrangements.
Of this group, the ones designated as “non-family households” amounted to 37 million individuals who are living in relationships that are not marriage-based. This group is probably the least protected medically and financially in the event of a separation or death of their partner.
Couples of any non-married orientation simply do not have the protection and benefits the traditional marriage legally provides via approximately 1,049 Federal laws.
These adults need to immediately address these important issues via other legal documents for the protection of all parties involved.
Any rights you desire need to be created via legal documents such as wills, living wills, advance medical directives including what non-family members can visit you, a domestic partner agreement, parenting agreement, revocable living trusts, life insurance trusts, and durable powers of attorney for finances to name the most common ones needed.
What about life insurance? Who owns the policy and who is the beneficiary of any life insurance proceeds held privately and also at work? If no one is listed, monies will be paid to the estate, and if no will exists, the estate will be distributed to blood relatives per state laws often eliminating any funds going to domestic partners.
What about company savings plans such as a 401(k) or deferred compensation? If this is left to a non-spouse, then the proceeds will be greatly reduced by the income tax liabilities due on the full amount at the time it is received. There may also be in-state inheritance taxes to deal with on the same funds. If no one is named, it will go to the estate and may exclude any monies be paid to domestic partners.
Who is listed as owners on the house title and mortgage? It will not only be painful to lose your partner in death, but to lose your residence at the same time to the bank, a former partner, or to other heirs may be devastating.
Who owns the furniture and contents? Can you prove it?
Who owns and has the loans on any vehicles? Will you lose those too?
What about the utilities? Who’s name are they in now? Will you have to place substantial deposits down to utility companies to transfer the account into your name after the loss of a partner?
What about any future Social Security survivors benefits for any children born outside of marriage? Has paternity been firmly established? If not, here is an example of what is in jeopardy for the surviving parent when a 35-year-old parent dies without establishing paternity leaving two children behind. Before death, they had been earning a $65,000 a year annual wage that was supporting the household. The children and surviving parent could be ineligible for up to $3,160+/- in monthly survivor benefits.
In the above scenario, regardless of age, if the couple had been married for 10 years, the surviving spouse could be eligible for Social Security benefits as early as age 60 on the deceased spouse’s earnings record or their own, whichever would provide a higher benefit. Now, as a non-spouse, that option is unlikely to be available and they must use their own record alone.
What about health insurance? If coverage is work-related, is it convertible to individual policies and if so, what is the time frame to do this after the death of your partner?
What about your investment accounts, credit cards, bank accounts, and credit lines? Do you have any of these titled together? Are you a joint holder, or a user? What will be your limits of future access to cash assets? What is your possible liability for the balances owed?
What about the possibility of a long-term illness striking either partner? Estimates now indicate 6 of 10 adults will need some type of long-term care in their lifetime. Is there adequate long-term care insurance or disability insurance in place for this probability? Who is going to pay for this need when it arises? Where is a medical directive? Think this medical issue is only for retirees to worry about? 58% of claimants are younger than age 65. What are these claims being filed for? Mostly the claims are for cancer, stroke, neurological disease, dementia, and multiple sclerosis. A typical claim will last just over a year. But will you be “typical?”
If you really want to protect your partner and children if it applies you need to take responsible action now. How? With the help of a qualified Attorney and a qualified Financial Planning professional team to design and assist you in implementing a complete package for your non-traditional family. Then, you need to periodically update your plans as your situation changes.
Any issue that is not addressed in a valid legal document form is an issue that is in jeopardy of physically, emotionally, and financially harming your partner at the time of your death or disability.
Are you hesitating for financial reasons or perhaps afraid of the costs of implementing these necessary documents and changes? That should be a minor concern compared to the costs of doing nothing. After all, you each only have just about everything to lose by not doing anything at all.
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