Alexandria, VA Estate Planning Blog

Tuesday, March 9, 2010

Estate Planning for Unmarried Couples

Every person with a life partner (married or unmarried) wants to provide for their loved ones, have financial, medical, and burial decisions made by the person(s) they trust, and avoid paying unnecessary taxes. The harsh reality is that the government has passed laws that favor married couples and discriminate against unmarried couples. Consequently unmarried couples need to establish an estate plan.

Most significantly Virginia law doesn’t create intestacy rights for unmarried couples. Dramatic results can occur if a partner dies without a will and other estate planning documents. The surviving partner will likely be completely disinherited and unable to make burial decisions. In cases of incapacity, the competent life partner will likely be precluded from making financial or medical decisions. With regard to inheritance rights and the aforementioned decision making authority, the law has been written to favor blood relatives.

Married couples are greatly benefited by the federal tax code. Consequently married couples incur no tax liability on many transfers that could cost unmarried couples hundreds of thousands of dollars. The most significant disparity exists with regard to Gift Taxes, Estate Taxes (Death Taxes), and Generation Skipping Taxes. That means that unmarried couples are more likely to have to pay more tax liability.

A skilled estate planning attorney can use cohabitation agreements, wills, trusts, powers of attorney, medical powers of attorneys, living wills, and advanced medical directives to provide for the orderly disposition of assets and to grant decision making authority. The attorney has many tools at his disposal to avoid or reduce tax liability. Advanced tax saving tools include Irrevocable Life Insurance Trusts (ILITs), Granter Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Creditor Shelter Trusts, Charitable Trusts, and a lifetime gifting program.

Drafting documents for unmarried couples requires keen attention to the relationship’s unique circumstances. The estate planning attorney must carefully draft documents that reflect the personal circumstances of the relationship. Failing to understand the nature of the relationship, or to draft appropriate language, can easily result in unintentional disinheritance.

If you are interested in establishing a new estate plan, having your existing estate plan reviewed, or just have questions, please feel welcome to contact me personally. I encourage any and all inquiries. Please note that we understand that your financial and non-financial information is sensitive. And as such, it will be kept confidential to the extent allowable by law.      

Authored by Luke Anthony Lenzi, Esquire

The Lenzi Law Firm, PLLC assists clients throughout Northern Virginia and Washington D.C. including Fort Washington, Falls Church, Ft. Myer, Vienna, Rosslyn, Springfield, Mount Vernon, Annandale, Fort Belvoir, Fairfax, Dunn Loring, Merrifield, McLean, Oakton, Reston, Burke, Great Falls, Fredericksburg, Stafford and Herndon in Arlington County, Alexandria County, & Fairfax County.

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