The Basic Elements of a Co-Parenting Estate Plan

Co-parents can easily get bogged down in the complexities of trying to understand and implement a comprehensive estate plan designed to protect against the unforeseen death of a co-parent or dissolution of a co-parenting relationship.  The major difference between a traditional parenting couple and a co-parenting couple is that, in most circumstances, there are no statutory protections for unmarried co-parenting couples – only protections that they create through contractual agreement or separate estate planning documents.

A basic estate plan should be essential for all individuals, regardless of their relationship status.  More sophisticated estate planning techniques – such as irrevocable trusts used to transfer assets from a wealthier co-parent to a less wealthy co-parent – bring federal gift tax law into the picture, particularly in with unmarried co-parents where the transfer of assets is not protected as it is with married couples.  (Protections exist through State and Federal law for asset transfers between married spouses.)

Courts have historically been given the responsibility of interpreting and validating a decedent’s estate plan.  These courts are tasked with the duty of ensuring that all assets and debts of the decedent are identified, that all bills are paid, and ultimately that the remaining assets are distributed according to the wishes of the decedent.  Without a marital relationship to dictate where assets go upon death, if one co-parent wants to provide for a surviving co-parent after his or her death, an estate plan is required.  Also, this estate plan must take into consideration the legal relationship that the deceased parent has with their child or children.  This requires what we will call a “nontraditional estate planner”.

The role of the nontraditional estate planner may appear at first glance to be similar to that of his or her traditional counterpart; however, a nontraditional planner has a specific understanding of how estate planning law fails to provide for the needs of co-parenting.  An estate planner needs an intimate knowledge of the clients, their finances and their relationship to their families. Co-parents often have emotional partners or spouses that are not a party to the co-parenting agreement, so this understanding is essential in order to predict and forestall any potential problems that may arise in moving their estate through the probate process.  Ultimately, the nontraditional estate planner must not only be an advocate for his or her clients, but also an educator, ensuring that clients understand the reasoning behind their planning strategy.

The basic elements of an estate plan for co-parents include:

Last Will and Testament – A Last Will and Testament allows the Principal, or drafter of the document, to control the distribution of his/her assets upon death.  The law provides that if a person dies without a will, their legal next of kin will be the “distributes,” or recipients, of those assets.  In most cases, that would be (in order) a spouse, children, parents, siblings, sibling’s children, aunts and uncles or first cousins.  With a will, Property may be divided and distributed in the way the Principal wants.

Limited Power of Attorney – This document allows the Principal to authorize another person to make financial decisions for them – typically, decisions which affect the child of the co-parenting relationship.  It can authorize, among other things, payment of debts, collection of payments, redistribution of assets, withdrawal of assets from a bank account and the sale of property.  Because of the important nature of these powers, there is an attached affidavit that the authorized party must complete before the powers become effective.

Designation of Guardian for Property Management and/or Personal Needs If a Principal were to be legally declared incompetent or incapable of managing their property or themselves, the court would appoint a guardian for that purpose.  The guardian can be a family member or emotional partner.  This document allows the Principal to designate who that guardian would be.

Living Will – A Living Will states exactly what actions a person wants or does not want to be taken if certain specifically outlined medical conditions arise.  It does not, however, authorize another person to make those decisions for the Principal of this Living Will.

Medical Power of Attorney / Health Care Proxy – This document allows a designated person to have access to medical records and make specified medical decisions for the Principal.

Co-parenting Agreement – This document is perhaps the most important estate planning tool as it lays out the intentions of the co-parents, and provides guidance for the specific circumstances of the co-parenting relationship.  Please see the description of co-parenting agreements provided on the site, and review FamilyByDesign’s Co-Parenting Agreement Template.

The basic elements of any given estate plan – including co-parenting estate plans – will be governed by the laws of the State and Country in which the plan is executed and/or where it is presented for recognition.  Note that issues of legal “portability” may arise if the co-parents travel to a jurisdiction that has different rules regarding recognition of the parental relationship.

These “Basic Elements of a Co-Parenting Estate Plan” are an important starting point, and will provide a foundation of protection for the co-parenting couple.  Nevertheless, there are many more protective and financial strategies that are advisable for parenting partners, which you will find in more detail on the FamilyByDesign site.