Volume 19, Number 5
The New Neighbors: Nontraditional Families, Nontraditional Estates
By Joan M. Burda
The face of the family in America is changing. Gone are the days when "family" meant Mom, Dad, and the kids. Now there are grandparents raising their grandchildren, single parent families, and gay and lesbian partners with children. These families are entitled to plan their estates just like those who are part of the married nuclear family. Mr. and Mrs. Cleaver must make room for the new neighbors.
The 2000 Census illustrates how the family in America has changed. More than 273 million people live in more than 105 million households, and 52 percent of those households consist of married couples. More than one-quarter (26 percent) live alone. The remaining 22 percent fall into the "nontraditional family" category. According to the Census Bureau, "nonfamily" households increased 23 percent since 1990, from 27.4 million to 33.7 million.
Family households make up 68.1 percent of the total households in the Census. Of those, 12.2 percent are headed by a female (no husband present) and 4.2 percent by a male (no wife present). These households include at least one person related to the householder by marriage, birth, or adoption and may also include people unrelated to the householder. The numbers do not specify how many of these households include same-sex partners and their children. Households with unmarried partners make up 5.2 percent of the total.
Differences in How Estates Are Handled
Probate laws in the United States provide for a decedent's assets to be passed in a fairly routine manner. When a decedent dies intestate, the law provides for a determination of how and among whom the estate will be divided. Tax laws allow married couples to pass entire estates to each other without liability, but the same is not true for those who are part of a nontraditional family. Therefore, estate planners must take into consideration the unique aspects of these relationships.
Nontraditional family estates require consideration of issues that are ordinarily taken for granted when planning for married couples. For example, intestacy statutes generally do not protect the survivor in a nontraditional family. Living wills and health care powers of attorney are essential in these situations. Likewise, written provisions for hospital and nursing home visitation are required to overcome the traditional policy of "family members only." Many actions taken for granted by traditional families are potential sources of problems for nontraditional family members.
Assessing the Client's Comfort Level
Some clients may be uncomfortable telling a lawyer the details of their family relationship. This is particularly true when dealing with same-sex couples, for whom homophobia is an ever-present issue. Attorneys must be able to alleviate such concerns or risk a less than candid relationship from the start. This, in turn, could result in a malpractice action against the attorney if the estate plan did not meet the client's needs.
Attorneys can avoid this situation by asking questions-lots of them. Do not assume there is a marriage. Estate planning questionnaires routinely ask for a spouse's name, date of marriage, and similar traditional-family information, but such questions are not pertinent to unmarried couples and can be construed as insensitive. Further, estate planning software often automatically places unmarried people into an "unmarried person with/without children" category, which does not address many distinctive issues presented by a nontraditional couple.
Attorneys need to be sensitive to the clients who sit before them, even when soliciting common information. For example, two women come in for an intake appointment and want to discuss estate planning issues. They want to execute wills, living wills, and health care powers of attorney; and they want to know what else they can do to protect their assets upon death. They intend to name each other as heirs. They want each other to be responsible for health care decisions. They live together and own property jointly; their retainer check shows both names on the account. A preliminary questionnaire can ask for clarification of the parties' relationship-just be sure yours contains an appropriate option. The accommodation can be as innocuous as altering "Name of spouse" to "Name of spouse/partner, please designate." If the questionnaire does not cover a specific situation, ask the clients outright for more information during your interview.
Nontraditional Family Property Issues
Traditional partners are married and become a new legal entity that often falls under "what's mine is yours and what's yours is mine." This is not always true for the nontraditional family, where many options exist regarding "ownership." Property may be owned only in one partner's name. The couple may have both individual and joint bank accounts, or they may not commingle assets at all. One may earn considerably more than the other. These factors can affect an estate plan.
There are no legal guarantees that property will go to the surviving partner upon death. In some situations, the deceased partner's family evicts the surviving partner from the house and sells it independently. What rights do unmarried partners have in relation to each other's property? Even lawyers may not have an easy time arriving at one specific response.
Clients need to be informed about their options. It may be in their best interest to hold the property jointly, with a right of survivorship. Some states permit property owners to execute transfer on death deeds for real estate holdings, but a key complication here may be the tax consequences of simply adding a name to the title of a house. Lenders may object to adding a name to the title without refinancing the mortgage. Gift tax considerations also must be addressed.
Property rights are affected by marital status. Nontraditional family members need to know about joint and survivorship bank accounts, transfer on death designations for securities and vehicles, and benefits of payable-on-death accounts. They may benefit from establishing a living trust. Taking steps to avoid probate can help give partners a sense of security and greater control over their property.
In addition, many retirement plans, including those for government employees, make no provisions for annuities for a non-spouse, which can be a huge consideration. Unmarried partners or those without legal standing should be informed about the necessity for naming beneficiaries for their insurance policies, 401(k) plans, IRAs, and the like. Likewise, clients with federal benefits should be informed that these are not available to nonspouse partners and offered other options if possible.
Other Nontraditional Families
Issues affecting nontraditional families who are related in some fashion also must be considered. Growing numbers of grandparents are raising their grandchildren and, in some cases, great-grandchildren. In addition to the standard estate planning documents such an arrangement would require, potential problems that are more likely with elderly clients also should be addressed. These include health care, guardianship, custody, support, and housing arrangements. Many grandparents raising grandchildren do not receive support payments from the biological parents, and because grandparents do not qualify as foster parents, they do not qualify for state subsidies. (This is true even if the local child services agency placed the children with grandma in the first place.) As a result, grandparents may be supporting these children on a fixed income. What happens to the children if the grandparent becomes ill and requires hospitalization or nursing home care? Where do the children go if grandpa can no longer care for them? Medicaid eligibility-a major concern for elderly clients-also comes into play, and the situation is exacerbated when minors are involved.
Another primary issue is the children's legal status. It is not unusual for a grandparent to have no formal documentation; often, formal custody orders or guardianship appointments were never even considered by the biological parent(s). The parent might show up at any time and legally take the children-or drop by only to return them once again. These are not traditional estate planning concerns, but they are essential issues for nontraditional families.
Same-Sex Couples and Their Children
More and more lesbians and gay men are choosing to have children. Many of these children are conceived by artificial insemination and, therefore, have only one biological parent. Family laws in the United States are not keeping pace with societal changes. Our custody laws are designed to benefit biological parents and do not recognize the second nonbiological parent in a nontraditional family, deeming that person a legal stranger to the child. Second-parent adoptions are seldom approved when the petitioner is the same sex as the biological parent; if the biological partner dies, the family unit is destroyed unless specific arrangements have been made. Specific and explicit instructions concerning minor children must be included in the estate plan. Same-sex couples often are estranged from their families, and it is unfortunately not unusual for these estranged family members to appear when a gay or lesbian relative dies and claim custody rights. The lawyer must prepare documents that will protect the children and their parents.
Most people agree that parents have the right to decide who will be responsible for their children and even believe that the expressed wishes of deceased parents should be followed. However, homophobia can render that a dicey proposition in the case of same-sex couples. An estate planner will want to prepare a document that will withstand a court challenge.
Where Do We Go from Here
In working with nontraditional families, the lawyer must look beyond the obvious and anticipate and seek solutions to the unusual. Attorneys must know if a challenge to a will is possible or likely, and clients must be advised what will happen if this occurs. Asking questions of a client is a lawyer's stock in trade-with nontraditional families, it is imperative. Developing an estate plan that is not cookie-cutter but unique to the situation will result in greater protection for the client. Estate planning for nontraditional families is a developing niche in which a lawyer can do a great deal of good. Look at the numbers-the clients are already here.
Joan M. Burda is an attorney practicing in Lakewood, Ohio.