by: Begley Law Group

by Thomas D. Begley, Jr., CELA

Characteristics and Important Issues

 [Article originally published in Straight Word] Non-traditional couples are either unmarried same-sex couples or heterosexual couples in committed relationships (domestic partners). These relationships may or may not be registered domestic partnerships or civil unions. The arrangements often have the following characteristics:

  • Common residence
  • Some form of joint responsibility for each other’s common welfare
  • Joint responsibility for living expenses
  • Neither partner is in a valid marriage
  • There is a committed relationship of mutual caring
  • Both parties are at least 18 years of age
  • An affidavit of domestic partnership or civil union has been filed in those states where such arrangements are authorized

            There are a number of important issues for non-traditional couples. These include:

  • Financial Control. If one partner is incapacitated, that person usually wants the healthy partner to handle financial affairs.
  • Health Care. If one partner is incapacitated, that person usually wants the healthy partner to handle medical affairs.
  • Autopsy. In certain cases, a domestic partner may want the surviving partner to consent to an autopsy.
  • Organ Donations. A domestic partner may wish the surviving partner to consent to organ donations.
  • Inheritance. Domestic partners usually want their partner to inherit upon death.
  • Ownership and Management of Real Estate. Domestic partners often purchase real estate together and are often concerned about how the property is titled and how the property will be maintained.


            To accomplish these objectives certain tools are available. Although these tools are important in all relationships, they are particularly important in non-traditional couple relationships.

  • Power of Attorney. A power of attorney allows the clients to grant their partners (and/or other people) the right to make financial decisions and to have access to bank accounts. Executing a power of attorney empowers the appointed person(s) to:
    • Authorize payments
    • Run a business
    • File taxes
    • Draw checks
    • Apply for insurance requests and benefits
    • Design and act on an estate plan
    • Act on any other financial affair that is specified in the power

Failure to execute a power of attorney may lead to unpleasant future consequences. Absent a power of attorney it may be necessary for someone to be appointed guardian of the incapacitated partner. Most state statutes do not give a domestic partner any priority in being named guardian. Family members, generally, would come ahead of a domestic partner. The financial power of attorney should obviate the need for having a guardian appointed.

  • Advanced Medical Directive. An advanced medical directive, sometimes called a health care proxy or a medical durable power of attorney, allows the clients to grant their partners (and/or other people) the right to make health care decisions and to have access to medical records. Executing an advanced medical directive (Health Care Proxy) empowers the appointed person(s) to:
    • Authorize medical treatment
    • Be consulted in medical decisions as the patient would have been consulted if the patient were capable
    • Be given first priority in visitation
    • Receive personal property and effects recovered by a hospital or police
    • Authorize release of a body from hospital at time of death
    • Failure to have an advanced medical directive in place might necessarily lead to the appointment of a medical guardian. Again, the domestic partner has no statutory right, in most states, to be named health care representative. Most state statutes give priority to family members.
  • Living Will. A living will allows the clients to be “on record” as to whether they want heroic measures used to keep them alive if there is otherwise no hope. 
  • Will. Absent a Will, New Jersey has an Intestacy statute (N.J.S.A. 3B:5-3).  According to the statute, the domestic partner does benefit through Intestacy. However, the statute may not dispose of assets in the way the client wants.    The Will should also appoint a Funeral Representative.  While the New Jersey statute gives first priority to the surviving spouse or the surviving civil union or domestic partner, it is good practice to name a Funeral Representative, especially if there is no civil union and the Domestic Partnership is not registered with the State of New Jersey.
  • Beneficiary Designations. If a domestic partner wants the surviving partner to benefit from the deceased partner’s life insurance, retirement account and/or annuity, the domestic partner must be named as beneficiary.  If one partner purchases life insurance on another, an issue arises as to whether the partner purchasing the life insurance must have an “insurable interest.”  If one partner purchases life insurance on himself or herself and names the other partner as beneficiary, no insurable interest is required.  Insurable interest is defined in N.J.S.A. 17B:24-1.1.
  • Equity Sharing Agreement. An equity sharing agreement is an agreement between the unmarried couple pertaining to ownership and management of real estate. 
  • Cohabitation Agreement. A variation on an equity sharing agreement would be a cohabitation agreement. These would be used in situations where the couple is renting, and could even be used in situations where the couple has ownership. 
  • Domestic Partnership Agreement. New Jersey authorizes domestic partnership agreements and grants various rights to domestic partners. It is important that an agreement be drafted to comply with the state statute in these cases. The domestic partnership agreement might include many of the same provisions as the equity sharing agreement or the cohabitation agreement, and several other issues might be addressed:
  • Employment benefits.
  • Disclosure of AIDS or HIV.
  • Autopsy.
  • Organ donations.
  • Domestic Partnership Act Registration.

Special Life Insurance Considerations

  • Viatical Settlements. A secondary market exists for life insurance. This market evolved as a result of the AIDS epidemic when many people were faced with the need to obtain funds for medical care and to maintain their standard of living. Through a viatical settlement a life insurance policy is sold to a company that will pay a lump sum cash payment often in excess of the cash value of the policy. Domestic partners should familiarize themselves with viatical settlements and should seek legal advice before executing a viatical settlement contract.
  • Accelerated Death Benefits. An accelerated death benefit is different from a viatical settlement. Under an accelerated death benefit the policyholder is given the option of receiving between 25% to nearly 100% of their benefit while they are still alive. The benefit is payable to a policyholder, during the insured’s life, in anticipation of death or on occurrence of a specified life-threatening or catastrophic condition, as defined in the policy. The event qualifying the policyholder for the benefit varies by company, product and state.
  • Life Settlements. A life settlement is similar to a viatical settlement in that an insurance policy is sold to a third party. The policy owner receives cash for the policy. The buyer becomes the new policy owner, continues to make the premium payments and receives the death benefit when the insured dies. However, there are several significant differences between a life settlement and a viatical settlement. The insured does not have to have a catastrophic or life-threatening condition to enter into a life settlement. A typical candidate for a life settlement is a high net worth individual, age 65 and over, with a life expectancy of 15 years or less, a change in insurability since the policy was issued, and a life insurance policy with a face value of at least $250,000. Since the insured cannot continue to pay premiums, it is often better to sell under a life settlement arrangement than to cash out the policy or let it lapse. Tax advisors must be consulted before exercising this strategy.