Estate planning for unmarried partners

The estate-planning process should be an integral part of everyone's financial plan. The benefits are obvious, including tax savings, efficient disposition of assets, end-of-life decisions, financial security for heirs and general peace of mind.

Attorney Tom Olsen: Mike, you are on News 96.5. Go ahead.

Mike: Good morning, sir. First time caller, long time listener. Had a quick question for you about trusts. My partner and I are not married. We are both divorced and probably not going to get married. We're buying some property out of State, North Carolina together. We just have some cash assets, we have some 401(k)s, 403(b)s, etc. We have been advised to look into trusts for the real estate. We may be buying some additional properties as well, recurring mortgage but we do have some equity value in there.

I just need a little advice on how to go about that. I've heard the term durable trust. I've heard the term living trust, irrevocable trust, etc.

Attorney Tom Olsen: By the way, do you have children, Mike?

Mike: We do have three and that's the purpose.

Attorney Tom Olsen: Meaning your partner has got some children and you've got some children?

Mike: Correct.

Attorney Tom Olsen: Mike, first of all, I'm going to give you advice based on you not being married to your partner. If you get married to your partner, everything changes. Mike, when you hear that term 'trust' out there, generally people are referring to what's called a revocable living trust. Revocable means that as long as you're alive, you can make any changes to it whatsoever, you can do whatever you want to.

Living trust means, it is a trust that is used, established, funded while you're alive. Mike, I think one living trust for you, one living trust for your partner would be a great idea because I can already tell you're a candidate for a trust because people are interesting in avoiding probate. Sometimes, we use a living trust especially when you own property in another State like North Carolina.

You're automatically in the category of having a trust because if you passed away, Mike, not only will we have to do probate in Florida, we'd have to do probate in North Carolina. Mike, you would have your trust, your partner would have your partner's trust. Whatever you guys buy property-wise, one half of that property would be owned by your trust. One half of that property would be owned by your partner's trust.

You might do the same thing with cash accounts and you can handle the IRAs however you want to. Mike, your trust might state when you pass away, whatever you own in your trust goes to your child or children or your trust might say, "If I pass away first, the assets in my trust will remain in my trust, be used for the benefit of my partner and only once my partner passes away, will my assets go to my child or children."

You're on the right track, Mike, I think a trust would serve you well. You said this term "durable". Durable applies to power of attorney. There's a thing out there that most people are using called "a durable power of attorney." It is separate and distinct from a revocable living trust. Mike, does that answer your question for you?

Mike: It does. Last question I would have, if you don't mind. Life insurance policies. Obviously, medical decisions, we would both want to offer each other those types of opportunity to make those decisions for each other, if a medical emergency arose and that sort of thing. Would those be inclusive in that?

Attorney Tom Olsen: Whether I do a standard will package for you or a trust package for you, either way, it will include a health care surrogate, where you're appointing somebody to decide what doctors, what hospitals, what medications. Now, Mike, as far as your life insurance is concerned, you'd have two choices. One would be, "Okay, I'm going to make my partner the beneficiary of my life insurance with the understanding if I die first, that money belongs to my partner and I don't know where it goes from there."

Or you can make your trust the beneficiary of your life insurance policy and again, say, if you pass away first, "The cash and properties in there stay in there for the benefit of my partner during my partner's lifetime and only once I pass away, would it go to my child or children." Mike, you've got some good options out there and we would love to assist you. You're welcome to come and make an appointment for a free initial consultation. My name is Tom Olsen with the law firm of Olsen Law Group in Orlando. Mike, does that answer your question?

Mike: It does, sir, very thoroughly, I thank you very much for your time. You have a great day.

Attorney Tom Olsen: All right, Mike. Thank you for calling. We appreciate that.