Sunday, July 21, 2002
Domestic partners should plan in making their wills
A story published today by the Bergen Record reports that lawyers and financial planners are strongly advising everyone - married or single, gay or straight - to get wills, durable powers of attorney, and health-care proxies. But when traditional families skip all that, at least they can rely on divorce and inheritance laws to determine how property is divided in the event of a breakup or death.
Meanwhile, couples can take steps to protect their partners and themselves, say lawyers, financial planners, and same-sex couples who have done it.
"The first thing is to get a will," said Richard McFeaters, 48, who lives in Teaneck with his partner of 17 years. "If you don't, the state steps in with all their predetermined inheritance rights. You need a professionally written will, not something you write on the computer or the back of an envelope."
Financial planner Lauren Locker of Totowa agrees. She works with many unmarried couples.
"When a couple comes in, I say, OK, are your families comfortable with this relationship?" she said. "If the answer is no, you have to go to an attorney and make sure the wills are airtight."
Along with the wills, unmarried couples need durable powers of attorney, which would enable one partner to pay the other's bills in the event of a serious illness. They also need health-care proxies so each partner can make medical decisions for the other. Legally, without such documents, the patient's family is entitled to make the decisions.
Although wills can ensure that the home passes to the surviving partner, they can't save unmarried partners from estate taxes that widows and widowers can avoid.
For example, in New Jersey spouses are allowed to leave an unlimited amount to each other. But unmarried survivors who inherit their partners' half of the home must pay estate tax of 15 percent on it. In fact, they may have to pay taxes on the entire value of the home unless they can prove that they helped pay for it, because tax law assumes that the first to die was the sole owner.
To deal with that issue, lawyers tell unmarried partners to keep copies of mortgage checks and other records that document their contribution to the home purchase.
Federal inheritance laws, by contrast, go easier on unmarried couples because they allow an estate of up to $1 million - a figure that is scheduled to rise in the years ahead - to pass to heirs without any taxation.
