Spouses and Partners
Hoffman was unmarried when he died but left his entire estate to his longtime companion Marianne O’Donnell. Without the benefit of a marriage, she will be unable to take advantage of spousal estate tax breaks. Hoffman’s estate is valued at about $35 million — according to Forbes magazine — which means that nearly $30 million will be taxed at a 40 percent rate. Between federal and state estate taxes, O’Donnell may have to pay more than $15 million right off the top.
While most people do not have to juggle millions of dollars, legal issues can arise with much smaller estates. An unmarried partner may not be allowed to make financial or medical decisions on behalf of the most important person in his or her life without a power of attorney or health care directive. Additionally, without a will, a surviving parent may have little to no say regarding financial assets left behind for children of the couple.
Providing for Children
Hoffman had three young children, only one of whom was born at the time he created his will in 2004. His will allows the mother of his children to turn down a portion or all of the money from his estate and put those funds into a trust for the benefit of his child. Unfortunately, the will only names his firstborn.
While state laws generally protect after born children — those born after creation of the will — failure to name all of your children in your estate plan can create a mess. Blended families are commonplace with children from prior and current relationships living under one roof.
Without proper estate planning, there is no guarantee your child from your first marriage will inherit his or her fair share if you pass away before your current spouse or partner. Additionally, an estate plan allows you to designate a guardian for your minor children or older children who have special needs.
Consult a Lawyer
These are only two of many examples of why an estate plan is necessary for couples and single individuals. Consult an experienced estate planning lawyer if you do not have an estate plan, have not recently updated your plan or have concerns about your existing planning documents.