Skip to content
A family eating and laughing at a table.

By Robert Simmons, J.D. – Assistant Vice President & Relationship Manager

Trusts, wills, and durable powers of attorney are a great foundation for any estate plan.  In nontraditional families, these documents are especially important, and special consideration should be given to what goes into these documents.

Non-Traditional Family

A non-traditional family is any family structure that deviates from the traditional nuclear family model, which typically consists of two married heterosexual parents and their biological children. Non-traditional families can include a wide variety of configurations, such as, but not limited to:

  • Single-Parent Families
  • Blended Families
  • Adoptive Families
  • Unmarried Couples
  • Mixed-Status Families

Blended Families

Many married couples will create a revocable living trust and will retain the right for the surviving spouse to amend that trust after the death of the first spouse. If that first spouse has children outside of the marriage, the surviving spouse is left with the opportunity to completely remove those children from the estate plan. Many people believe their spouse would never do that, but proper planning can ensure it.

In many states, spouses have a statutory right to a share of their spouse’s estate. In most instances, it doesn’t matter if the assets are in a trust. Even a well-drafted estate plan can be undone if the spouse’s share isn’t considered. If a couple wants to agree to an estate plan, a specific written property agreement would need to be in place, and often is better if it is done prior to the marriage.

Unmarried Couples

Many couples think that if they have been together long enough, they can act as each other’s spouse. Unfortunately, that’s not always the case. Some states don’t recognize common law marriage. In those states, unmarried couples may not have access to the same benefits married couples do. Some key differences include:

Property: If a couple never married, the legal protections and frameworks established for married couples do not automatically apply. Property ownership depends on how the property is titled. If the property is owned jointly, it may be as joint tenants or tenants in common, with different implications for survivorship and division of interest.

Taxes: Gifts between spouses are not taxed. However, gifts between couples that have never married are subject to gift tax rules.

Health Care Decisions: Unmarried couples may find it very difficult to act for their partner at medical facilities or make end-of-life decisions. This is because partners may not have these rights unless they are designated as health care proxies or hold a medical power of attorney.

Mixed-Status Families

Families that include a non-U.S. citizen require special consideration, as well. Naming a non-U.S. person as a trustee can have big tax consequences, particularly if IRAs are involved. U.S. estate and gift tax laws provide different treatment for non-citizen spouses. For instance, the unlimited marital deduction, which allows spouses to transfer assets to each other tax-free, does not apply if the receiving spouse is not a U.S. citizen.

Beneficiary Designations

There are other considerations for nontraditional families outside of the typical estate planning documents. Beneficiary designations should be reviewed regularly. Problems can arise when divorced parents name their minor children as beneficiaries on accounts.  The surviving parent usually gets control of the assets which ends up being the ex-spouse.

Sometimes those beneficiary designations are never changed after a divorce. A 2013 U. S. Supreme Court decision awarded life insurance benefits to a man’s ex-wife, not his current wife, when he forgot to change the beneficiary listed on his life insurance policy through his work. Many states have enacted laws to prevent this from happening. This man was in one of those states, but his unique circumstances still led to the ex-wife receiving the proceeds from his life insurance policy.

It’s important to check those beneficiary designations regularly!

Nontraditional families face many challenges when trying to put together an estate plan. These challenges can be complicated, but not impossible. An experienced estate planning attorney can help make sure your estate plan does exactly what you want it to do.