The Importance of Estate Planning in Non-Traditional Families
I got a heartbreaking call this week from a woman whose fiancé had recently died. They had been a couple for many years, and were the parents of an infant son, but they had never gotten around to getting married.
Her fiancé had a well-paying job with benefits, and was the sole income earner in the family. However, he didn’t have a Will. Although he had an insurance policy, retirement account, and savings account, the insurance was purchased and accounts opened years before he was engaged, and he never got around to naming his fiancé as his beneficiary.
So when he died suddenly and unexpectedly, his fiancé and their child were financially devastated. She had to move out of the home she shared with her fiancé and find a new place to live. His mother was named as the beneficiary of the insurance policy, retirement account and savings account, and had no interest in sharing it with her grandson or his mother.
The number of non-traditional families is growing. Studies show that more Americans are delaying marriage. A recent Pew Research study found that only 26 percent of Millennials age 18 to 32 are married. In contrast, 36 percent of Generation X, 48 percent of Baby Boomers and 65 percent of the generation before were married at that age. Additionally, almost half of all births to women in the Millennial generation were outside of marriage.
Married couples enjoy certain legal protection by virtue of their relationship. For example, Texas law grants a surviving spouse a life estate in the couple’s homestead, and federal laws prohibit an employee-based retirement plan from passing to anyone but a surviving spouse, unless the surviving spouse consents in writing to someone else being named as the beneficiary.
These types of protections are not available if you are unmarried, which makes estate planning extremely important. The need to plan is even greater if the relationship between your family and partner is strained.
It’s important to have a Will; otherwise, your probate assets will pass according to the intestacy statutes, to the exclusion of your partner. It is also extremely important to periodically review beneficiary designations on your insurance policies, retirement plans and other financial accounts to make sure they benefit those who are depending on you for support.
Otherwise, the people who benefit from your estate may not be the ones who depend on you most.