Family structures have evolved from the traditional household of a father, mother, and one or more children under the age of 21 living together in a household. A variety of other arrangements — couples in same-sex marriages, unmarried couples with children, blended families, grandparents raising grandchildren, and of course, single-parent households — also exist.
Whether you’re living in a household as a single parent, a divorced parent, a same-sex partner, or cohabiting with your partner, your family is part of the new normal — a modern family.
As the family structure evolves, the financial needs of modern families also have changed from that of the traditional household. Financial guidance is more complicated and not always addressed by advisers or family members. Sometimes, in blended households’, financial decisions tend to be singular, rather than jointly made between the family members.
If you’re living with a partner, without the status of marriage, you typically forgo more rights than you gain. You aren’t eligible for survivor benefits from retirement plans or Social Security and transferring or bequeathing assets to each other may trigger a tax bill that married couples don’t face.
Without a health care directive, you aren’t the default decision-maker in case of ill health. And you have no automatic rights to your loved one’s property and other assets if you split up.
While divorce laws aim for an equitable division of assets, unmarried partners generally have no claim on each other’s possessions.
Keep a portion of your money in an individual account. Make saving a priority, err on the side of caution, and accumulate an emergency fund to cover six to nine months of household expenses. Since you cannot tap into your partners Social Security benefits or pension, make sure that fully funding your retirement savings is a priority.
Keep your non-mortgage debts separate. Remember, if you co-sign for a loan or a credit card, you’ll be liable for the entire amount if your partner refuses to pay his or her share. Prior to co-signing on any loan, understand how the additional payment would impact your cash flow.
Do you have disability insurance to supplement your income if you are disabled while you are working? Is your savings significant enough to cover the cost of long-term care expenses in retirement or should you consider a long-term care insurance policy? How can life insurance fill significant financial gaps?
Adult members of a modern family should work with a skilled estate planning attorney to develop an estate plan that is consistent with their goals and objectives. In addition to the topics of death and disability, this conversation should address:
— Cohabitation: Do you need a cohabitation agreement? A cohabitation agreement is a contract governed by California contract law, outlining each partner’s financial obligations to the other, both during and after cohabitation.
— Homeownership: Before buying a home, understand how titling affects the strategies available to you. Do not assume that the options appropriate for a married couple are the same for you.
— A durable power of attorney: This document gives your designated agent the power to manage your financial wishes during periods of incapacity. Who will make these decisions for you?
— An advanced health care directive: This document lets you name another individual as your agent to make health care decisions for you if you become incapable of making your own decisions.
— A will: A will can designate who will get your assets when you die. You can also nominate a guardian to raise your children who are under 18. Also, designate “a custodian” to manage assets for your children until they reach any age from 18 to 25.
— A trust: This document preserves your privacy and eliminates probate. Your assets are placed into a trust for your benefit during your lifetime, then transferred to designated beneficiaries at your death.
— Beneficiary designations: Certain assets pass outside of a trust, such as retirement, life insurance and annuity designations. Have your beneficiary designations been changed following a divorce or death? Thoughtful consideration should be placed on the primary and contingent beneficiaries of these assets to align with your current estate planning desires.
Both traditional and modern families should always take control of their planning and leave as little to state law interpretation as possible. To eliminate future problems, take the time now to identify what is important to you and plan appropriately for your future. Empower yourself by making sound, thoughtful decisions for yourself and your loved ones today, before it is too late.
from Daily News http://bit.ly/2Vc9zRX
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