Should Unmarried Couples have an Estate Plan?

Estate Planning, Power of Attorney, Protecting Children, Wills / Joint Tenants with Right of Survivorship, St. Petersburg Estate Planning Attorney, Tenants in Common, Unmarried, Will

For unmarried couples, having an estate plan might be even more important than for married couples, especially if there are children in the family. The unmarried couple does not enjoy all of the legal protection afforded by marriage, but many of these protections can be had through a well-prepared estate plan.

A recent article “Planning for unmarried couples” from nwi.com explains that in states that do not recognize common law marriages, like Florida, the state will not recognize the couple as being married. However, even if you learn that your state does recognize a common law marriage, you still want to have an estate plan.

A will is the starting point of an estate plan, and for an unmarried couple, having it professionally prepared by an experienced estate planning attorney is very important. An agreement between two people as to how they want their assets distributed after death sounds simple, but there are many laws. Each state has its own laws, and if the document is not prepared correctly, it could very easily be invalid. That would make the couple’s agreement useless.

There are also things that need to be prepared, so an unmarried couple can take care of each other while they are living, which they cannot legally do without being married.

A cohabitating couple has no right to direct medical care for each other, including speaking with the healthcare provider or even seeing their partner as a visitor in a healthcare facility. If a decision needs to be made by one partner because the other partner is incapacitated, their partner will not have the legal right to make any medical decisions or even speak with a healthcare provider.

If the couple owns vehicles separately, the vehicles have their own titles. If they want to add their partner’s name to the vehicle, the title needs to be reissued by the state to reflect that change.

If the couple owns a home together, they need to confirm how the home is titled. If they are joint tenants with rights of survivorship or tenants in common, that might be appropriate for their circumstances. However, if one person bought the home before they lived together or was solely responsible for paying the mortgage and for upkeep, they will need to make sure the title and their will establishes ownership and what the owner wants to happen with they die.

If the wish is for the surviving partner to remain in the home, that needs to be properly and legally documented. An estate planning attorney will help the couple create a plan that addresses this large asset and reflect the couple’s wishes for the future.

Unmarried cohabitating adults need to protect each other while they are living and after they pass. A local estate planning attorney will be able to help accomplish this.

Reference: nwi.com (Jan. 24, 2021) “Planning for unmarried couples”

When a Sibling Executor Goes Rogue

Estate Planning, Executor, Probate, Tax Planning / Estate Planning, Executor, Inheritance, Probate Court, St. Petersburg, Tax Planning, Tenants in Common

It’s one thing to fight with a sibling over toys when you are young. However, as adults, and more to the point, as an executor, there’s no room for tantrums or not acting in the best interests of the beneficiaries.

An executor who refuses to sell an inherited home, is opening themselves up to legal actions. Beneficiaries have rights, and one of those is to have an executor fulfill his or her legal obligations.

nj.com’s recent article, “What happens when siblings can't agree about selling parents' home” explains that even though an executor has some discretion in administering the estate, she has a duty to settle and distribute the estate expeditiously and efficiently for the best interest of the beneficiaries.

Unless the parent’s will has specific instructions for the home, the executor—at her discretion—has two choices. She may sell it and distribute the net proceeds. The other option is to distribute the home "in kind" to the beneficiaries. That means retitling a deed from the estate to the beneficiaries as tenants in common. If the property is distributed in kind, the beneficiaries will then own the property jointly and will be jointly obligated on the home equity loan. State law may dictate that this loan isn’t not paid off with other estate assets, unless specifically instructed in the will.

Creditors have a specific time period in which to present a claim to the executor. As a result, many executors won’t make distributions before that time has concluded. At that point, like in New Jersey, if there are any beneficiaries who aren’t Class A beneficiaries (grandparents, parents, children, stepchildren, grandchildren, spouses, or domestic partners) or if there is a trust, then a New Jersey Inheritance Tax Return must be filed within eight months of death. Thus, many executors won’t make distribution before a Notice of Assessment (showing that no additional tax is due) is received from the Division of Taxation.

If the parents passed away in 2017 in New Jersey, and if either estate exceeded $2 million, there may have been a state estate tax return to be filed and possibly taxes owed. There is now no New Jersey estate tax for decedents dying after 2017. Even if there is no tax and all the beneficiaries are Class A beneficiaries, the state requires that a waiver be obtained from the Division of Taxation to release its lien on the property of a decedent.

However, if an estate has been open for a very long period of time, and family members think that the executor isn’t fulfilling her obligations, they may sue to have the executor discharged and a new one appointed. The court may discharge an executor for not obeying a court order, like filing an accounting or an inventory of estate assets.

Once the court gets involved, things can turn ugly for the family. Heirs can ask the court to direct the executor to perform specific actions, and the hope is that the executor will wake up and take the court’s order seriously. It’s a terrible legacy for a family, but unfortunately one that does occur often enough.

Reference: nj.com(October 4, 2018) “What happens when siblings can't agree about selling parents' home”