I’ve written previously about estate planning for unmarried couples. Let’s look at estate planning for domestic partnerships and what this term legally means.
A domestic partnership, according to Section 6-101(b)(1) of the Annotated Code of Maryland, is defined as:
A relationship between two individuals who:
a) Are at least 18 years old;
b) Are not related to each other by blood or marriage within four degrees of consanguinity under civil law rule;
c) Are not married or in a civil union or domestic partnership with another individual; and
d) Agree to be in a relationship of mutual interdependence in which each individual contributes to the maintenance and support of the other individual and the relationship, even if both individuals are not required to contribute equally to the relationship.
So a domestic partnership applies only to adults who are not related (within four degrees) by blood or marriage and are not married or in a union or partnership with anyone else. They must also agree to be in said relationship.
In terms of estate planning, many of the same documents will apply as for married couples, but the terms may be slightly different. In addition, the partners may want to create a relationship or cohabitation contract, which is a formal document which states what happens with any shared or individual property if the partnership ends or one partner dies.
Such a contract can also define child guardianship or support, and define beneficiaries or agents for each partner. Cohabitation or relationship contracts may not be legally binding in all states, however, an agreement that has been properly drafted and witnessed may be eligible to be honored by a court.
For purposes of jointly owned real estate, the partners may enter into a specific agreement such that the real estate will not be subject to inheritance tax when transferred to the survivor of the couple.
Domestic partnerships still need to have all the typical estate planning paperwork in place: powers of attorney, distribution of remains, last will and/or a trust, and so forth. If properly drafted, all of these documents are considered legally binding. In some states, such as Maryland, the surviving domestic partner will still be subject to inheritance tax on the assets they inherit from their deceased partner.
It’s best not to leave important decisions to chance, or to the defined order of agents in the legal system. If you want to ensure your domestic partner is able to act on your behalf, inherit any property from your estate, or have any other rights regarding your property, then make sure to sign legal documents that explicitly set forth your wishes. As always, I recommend that you discuss these matters thoroughly with your estate planning attorney.