Can a testamentary trust prevent cohabiting partners from receiving funds?

Navigating estate planning can be complex, especially when considering the rights of cohabiting partners versus legally married spouses, and testamentary trusts offer a powerful tool for directing assets according to your wishes, even if those wishes diverge from what default inheritance laws might dictate.

What Happens If I Don’t Have a Plan?

Without a clear estate plan, California law prioritizes spouses and blood relatives in the distribution of assets; cohabiting partners, unfortunately, have no automatic inheritance rights. This can lead to unintended consequences, with assets passing to family members instead of the person you intended to benefit. Approximately 60% of Americans don’t have a will, leaving asset distribution to state law, and for unmarried couples, this can be particularly problematic. A testamentary trust, created *within* your will, allows you to specifically designate beneficiaries and outline the terms of their inheritance, effectively overriding the default rules.

How Do Testamentary Trusts Work for Unmarried Couples?

A testamentary trust is established through your will and comes into effect *after* your death. You, as the testator, define the trust’s terms, including who the beneficiaries are (which can certainly include your cohabiting partner), how and when they receive funds, and any conditions attached to the inheritance. For example, you could establish a trust that provides for your partner’s lifetime care, with the remaining assets going to your children after their passing. This level of control is often impossible to achieve without a thoughtfully crafted estate plan. All assets acquired during a marriage are community property, owned 50/50, and benefit from a “double step-up” in basis for the surviving spouse, a benefit not available to unmarried couples.

Can I Completely Disinherit My Partner?

Yes, you generally can. However, outright disinheritance can sometimes be challenged in court, especially if your partner can demonstrate they were financially dependent on you or contributed significantly to your assets. A more strategic approach is to avoid direct disinheritance and instead use the trust to direct assets to other beneficiaries or charitable causes. This minimizes the risk of a legal challenge. It’s important to remember that formal probate is required for estates over $184,500, and executors and attorneys fees can be substantial, often a percentage of the estate’s value, making probate avoidance a significant benefit of using a trust.

What About Challenges to the Will or Trust?

Challenges to a will or trust are possible, but can be minimized with careful planning and execution. California law enforces “no-contest” clauses, though narrowly. A beneficiary who directly contests the will without “probable cause” risks losing their inheritance. However, it is prudent to be thorough in your documentation and consult with an experienced estate planning attorney to ensure your will and trust are legally sound. I remember a client, David, who hadn’t updated his will in over 20 years. He intended to leave everything to his long-term partner, Sarah, but his old will still named his ex-wife as the primary beneficiary. Thankfully, we were able to amend the will before his passing, ensuring his wishes were honored, but it was a close call.

How Does This Differ From a Living Trust?

A testamentary trust is created within your will and takes effect after your death. A living trust, on the other hand, is created *during* your lifetime, and you transfer assets into it during your life. While both can achieve similar goals, a living trust offers the advantage of probate avoidance, as assets held in the trust don’t have to go through the probate process. I recently worked with a couple, Emily and Charles, who created a living trust to protect their digital assets – email accounts, social media profiles, and online financial accounts. They designated a trustee with the authority to access and manage these assets after their passing, ensuring their online legacy was handled according to their wishes. This is critical as an estate plan must grant explicit authority for a fiduciary to access and manage digital assets.

Protecting your assets and ensuring your wishes are honored requires careful planning, especially when you have a non-traditional family structure. A testamentary trust is a powerful tool, but it’s essential to work with an experienced estate planning attorney who understands the complexities of California law.

Don’t leave the future of your estate to chance.

Contact Steven F. Bliss ESQ. today at (951) 412-2800 for a consultation and take the first step towards securing your legacy.