This is the 2nd part of a three part series on estate planning issues for non traditional families. You can read the first here – Estate Planning Issues for Non Traditional Families – Part I.
Estate Planning and Common Law Marriage
If a couple resides in a state that permits common law marriage, estate planning can proceed just as it would in the case of a traditional marriage union. Couples who do not live in a state that permits common law marriage may still be able to claim married status if they have lived together for more than fifty years, have filed joint tax returns for most of this time, and under other specific conditions and special circumstances.
If an unmarried couple is unable to obtain a statutory recognition of their union, they will be unable to take advantage of certain estate planning rights afforded to legally married couples, such as lower estate tax rates, and automatic estate beneficiary designation in the absence of another named beneficiary. Couples in this situation will be looked upon as having no legal rights to either their deceased partner’s property or assets, unless they have been legally designated as the beneficiary of said assets and property by the deceased or by a court of law.
Since most states do not recognize common law marriages, couples who are unable to legally marry, i.e. same sex partnerships, or who choose not to do so, may be able to elect to declare a Domestic Partnership instead. A few states recognize these types of unions as having varying degrees of legal authority in terms of the rights afforded to married couples.
Under state law, a domestic partner must qualify as either a spouse or a dependent in order to qualify for employer provided health coverage, within the states that permit allocation of said benefits. These states include California, Connecticut, Maine, Minnesota, New York, Rhode Island, Vermont, Washington, and Washington D.C.
In terms of Cobra coverage, the employee’s partner as well as dependent children are eligible for this coverage, but are not allowed to make an independent election of COBRA coverage. Employers will sometimes allow coverage to continue when it is not technically available, but most retain the right to modify or terminate coverage as they see fit.
Domestic partners can also face additional obstacles when it comes to the issue of life insurance. Married couples are allowed to take out individual insurance policies, naming their spouses as beneficiaries, regardless of whether or not the partners have what the state defines as “insurable interests” in one another. For domestic partners, the absence of familial relationships as a result of the marriage, such as parent, child, and spouse may result in the restriction of naming of beneficiaries.
Read Part 3