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Birmingham AL Collaborative Divorce Law Blog

Monday, June 6, 2016

ESTATE ADMINISTRATION WITH MARRIED AND UNMARRIED PARTNERS

While talks pertaining to divorce, death, and/or estate planning are hardly welcome ones in a loving and committed marriage or partnership, couples must realize that frank and honest discussions about divisions of property and assets are an absolute necessity.  This is doubly true and important when couples may have children from prior marriages or hold significant assets, especially assets attained prior to the partnership or marriage.  There is also now added complexity for same sex couples in Alabama as a result of last year’s Supreme Court of the United States (SCOTUS) ruling in Obergefell v. Hodges.  (Unmarried partnerships are particularly complex in Alabama in light of the ensuing fight between the Alabama Supreme Court and its federal brethren, SCOTUS and the United States District Court for the Southern District of Alabama.)

Among the factors to be considered, particularly in the unmarried partnership arena is the inability to receive a federal surviving spouse estate tax deduction.  Though civil unions usually qualify for this deduction, domestic partnerships, very popular prior to the downfall of DOMA (the Defense of Marriage Act), are no guarantee on this issue.  For example, in a recent New Jersey Tax Court ruling, a man whose partner of 31 years died six days before they planned to wed was denied entitlement to a $101,041 estate tax deduction as a “surviving spouse” because the couple had neither married nor been in a civil union at the time of death. 

 This incident hopefully highlights the importance and need for thorough estate planning – not only for unmarried same-sex couples, but also for any marriage, long-term cohabitation, civil union, or domestic partnership.  If a couple is aware that a surviving partner may not be eligible for the surviving spouse deduction, any estate which is worth more than the annual estate and gift tax exemption ($5.43M per individual for 2016), it is imperative that plans be made for the inevitable federal estate tax.  Granted, most estates will not be worth this amount, but keep in mind that the estate tax exemption amount changes every year and could realistically see a marked decrease in years to come.  Less than 10 years ago, 2008, the threshold was $2M, an amount easily reached with modest insurance coverage and/or property holdings.

Whether married, cohabitating, or in a domestic partnership, estate plans are not just for parents or the super wealthy.  Planning ahead – wills, trusts, powers of attorney – are not for the protection of the dead.  Rather, they allow us to look ahead and protect our surviving loved ones.  To ensure that they have the means to continue living in the way we would like.  In addition, a well-planned estate eases the strain and stress of estate administration to an often-grieving executor or administrator.  Planning for your own death or the death of your partner or spouse is one of the most unselfish acts you can give them.  The attorneys of Nolan & Byers are committed to the protection of all of their clients, not just through a divorce or custody dispute, but also at a time when the inevitable passing of one partner happens.  We will work closely with you and a highly qualified estate planning professional to create the best plan for you.  If you have questions regarding any domestic or family issue, including estate planning for you or your spouse or partner, please contact us.

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