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Issue 45 – October, 2024

Estate Planning for Polyamorous Families[1]

By: Colleen A. Noonan, Esq.[2] and John E. Zurek, Esq.[3]

American families are constantly evolving. That is nothing new. What may come as a surprise, however, is that a growing number of Americans identify as being polyamorous. Despite the rise of polyamorous relationships among the general public, our existing tax and legal systems are not equipped to accommodate polyamorous relationships. Individuals involved in polyamorous relationships often need custom estate planning documents in order to achieve the same outcomes provided for traditional nuclear families under current law (such as who receives assets under intestacy if a spouse dies without a Will, or who makes medical decisions if one spouse is in an accident without an advance medical directive).  Polyamory may be new ground for some people, but estate planners have long been aware that families come in all shapes and sizes. By working with an attentive and experienced estate planner, individuals in polyamorous relationships can provide certainty and security for their partners and loved ones and help to bridge the gap left open by current laws.

The Polyamory Legal Advocacy Coalition (“PLAC”) defines polyamory as “a practice or philosophy where someone has, or is open to having, multiple loving partners simultaneously with the knowledge and consent of everyone involved.”[4] Polyamory falls under the more general umbrella of consensual non-monogamy, which describes any relationship where all of the partners give explicit consent to engage in sexual, intimate, and/or romantic relationships concurrently with multiple partners.[5]

More than one in five people in the United States have taken part in some sort of consensual non-monogamy in their lives, and it is estimated that approximately 4 to 5% of adults in the United States are currently in a consensual non-monogamous relationship.[6]  Younger Americans appear to be more open to the idea of consensual non-monogamy. According to a 2023 survey by the Pew Research Center, 51% of Americans between the ages of 18 and 29 say that open marriages are acceptable. Furthermore, in a 2020 poll of 1,300 American Adults, 32% say that their ideal relationship is non-monogamous to at least some degree.[7]

A leap forward for polyamory recognition took place in July 2020, when Somerville, Massachusetts (a community adjacent to Boston) became the first municipality in the country to officially recognize polyamorous relationships in its domestic partnership ordinance.[8] This decision arose out of the COVID-19 pandemic, as unmarried residents wanted to have the ability to visit sick partners in the hospital.[9] Somerville’s domestic partnership ordinance grants persons in domestic partnerships the same rights and privileges as those who are married, except to the extent doing so would conflict with state or federal law.[10] Less than a year after Somerville enacted its ordinance, the neighboring city of Cambridge, Massachusetts (home to Harvard and MIT, among others) also amended its domestic partnership ordinance to include polyamorous groups.[11] The nearby town of Arlington, Massachusetts likewise amended its domestic partnership bylaw in 2021, triggering review and subsequent approval by the Massachusetts Attorney General’s Office under M.G.L. ch. 40, §32.[12]

While the cities of Somerville, Cambridge, and Arlington have taken steps toward recognizing and normalizing polyamory in their communities, the rights that these three municipalities can provide are very limited, and the federal and state governments have not extended these rights further. Domestic partnerships are not afforded the federal protections or rights granted to civil marriage, such as the estate tax marital deduction.  Further, polygamy or bigamy (the practice of having more than one spouse at the same time) is criminally prohibited in every state and federal territory in the United States.[13]

In short, throughout the majority of the United States, there is essentially no protection for polyamorous relationships under the law.  As such, the default estate settlement outcomes that the law provides for traditional nuclear families simply do not protect people in polyamorous relationships who wish to provide for their (multiple) partners at death. For example, if an unmarried partner in a polyamorous relationship dies without an estate plan in place, there is no mechanism under the law that would ensure the other partners in the relationship receive any portion of the deceased partner’s estate, which would, instead, be distributed to the deceased’s next of kin under applicable state intestacy law where the unmarried partner died. Alternatively, if the decedent was married to one of their partners and died without a Will, the married partner would receive a portion of the decedent’s estate under applicable state intestacy law, depending on the applicable state and family circumstances, but leave the other partners without an inheritance.

Polyamorous partners can attempt to solve some of these issues through self-help strategies, but there are downsides to these options. For example, polyamorous partners may choose to leave assets to the other partners through will substitutes, such as payable on death designations (“PODs”).  Through these designations, money in an account will pass to the named beneficiaries outside of probate. However, if the POD fails to name one or more of the partners, such partner will receive nothing from that account. Additionally, the asset will pass to the person named on the POD even if the account owner has a Will that conflicts with the POD. This could be an issue if the decedent never updated a POD after a change in circumstances, such as forming a relationship with a third or further additional partner. (Note: when naming anyone other than a spouse as a beneficiary to a qualified retirement plan, such as IRA, spousal consent is required.) Additionally, naming a non-spouse as beneficiary on a POD does not avoid the issue of potential death taxes. The assets will be included in the value of the deceased’s estate for the purpose of calculating whether death taxes are owed.

Joint ownership of an account is another type of will substitute that allows assets to pass outside of probate, but many financial institutions do not allow more than two people to be titled on an account jointly. Further, making an account joint could expose the account to creditors and could have unintended gift tax consequences.  For 2024, a United States citizen can gift up to $18,000 tax-free to anyone of their choosing (the “annual gift tax exclusion”),[14] but if the gift is in excess of the annual gift tax exclusion and the beneficiary is not the grantor’s spouse, then the grantor needs to file a federal gift tax return and use some of their remaining federal estate tax exemption.[15] In this case, if a partner were to add one of their non-spouse partners as a joint owner on a bank account holding $50,000, and the non-spouse partner withdrew more than $18,000 from the account in 2024, the amount over $18,000 could be treated as a gift above the annual gift tax exclusion, triggering the need to file a federal gift tax return, utilizing some of their remaining federal estate tax exemption.

Importantly, will substitutes do not include any parameters for how the money should be managed after the death of a partner, leaving the surviving beneficiaries free to use the money however they want, including gifting or bequeathing the money to new romantic partners. This could be an issue if the deceased partner ultimately wanted any remaining money to pass to their children, or even other family members, after the death of the other partners.

Beyond what happens with the money at death, there are other estate planning concerns to consider for those in polyamorous relationships. Who should make medical or financial decisions if a partner becomes incapacitated? Who can remain in the primary residence if a partner dies? Who should become the legal guardian of any minor children of the decedent? The default answers to these questions provided for under the law for these various situations excludes unmarried polyamorous partners, and may contradict the decedent’s wishes.

Another self-help strategy that is commonly contemplated as a solution for certain tax, insurance, and property ownership issues is incorporating a polyamorous household as a business. However, for the “family business” solution to work, the household would need to be engaged in legitimate commercial activity with the goal of making profit, or else the corporation would be fraudulent. A primary residence could provide a legitimate business interest for an LLC that owns the property if the members pay fair market rent to the LLC, however, this creates income tax obligations on the rent payments, so is generally not advisable for that reason. It can also potentially make the members ineligible for the mortgage interest deduction on their income tax returns.

For these reasons, it is imperative that partners in polyamorous relationships work with an estate and tax planning attorney to discuss their wishes and goals, and establish a thoughtfully-crafted estate plan. Doing so is the only way to ensure their partners will be in the driver’s seat at their incapacity or death and will benefit from their estate as intended.

Estate Planning Considerations for Polyamorous Clients

When creating an estate plan, it is vital for estate planning attorneys to understand that polyamorous (or “poly”) relationships come in any number of shapes and sizes. For example, a “polycule” (a term referring to a connected network of people, all of whom are involved in a consensual non-monogamous relationship with at least one other person in the network[16]) could consist of three, unmarried partners in a committed, romantic relationship. Alternatively, a polycule could consist of a married couple and the unmarried partner(s) of each spouse. There could be three partners or a dozen partners. Some partners may live together, while others may live separately. Some partners may be committed to one another, while others may be more casual or temporary. In short, each polyamorous relationship can come in any number of shapes and sizes and can include people of all sexual orientations.

Given the variety that exists in polyamorous relationships, it is extremely important for an estate planning attorney to take sufficient time to ask thorough questions during their introductory meeting with new poly clients in order to understand the unique structure and needs of their relationships. As a starting point, counsel should first determine who their client is: typically, state bar rules allow for joint representation of a couple (married or otherwise) with certain parameters and disclosures.  With three or more people in the relationship, the likelihood for conflicts increases and if the attorney is representing the group, the same robust consent and waivers should be obtained at the outset of the engagement.  The attorney should also identify the members of the poly relationship(s) and their relationships with one another, including whether any members are legally married, the financial structure of their relationships including whether and to what extent they are financially dependent upon one another, what property they own and how that property is held, and their legal and/or biological relationship with any children.

As with all estate planning clients, it is crucial for estate planning attorneys to understand each client’s goals and concerns when deciding on an estate planning structure for a poly client. Leaving money outright to partners in a Will may work for some poly clients, but it also poses risks that attorneys should be sure to explain to their clients. As with the will substitutes described above, once money is left outright to a partner upon the death of a decedent, that partner can do whatever they want with that money, including spending it, gifting it to someone else, or bequeathing it in their own estate plan to a new partner, among other things. This may satisfy the wishes of some clients, but other clients may want to provide for their partners only during their partners’ respective lifetimes and, ultimately, want their remaining estate to pass to their children or other beneficiaries of their choosing after those partners die. For these clients, trust planning may be an excellent option.

By leaving money in trust shares for their partners, the client can continue to exercise some control and direction over how (and when) the money in their estate is spent after the client’s death, and where it ultimately goes when their partners subsequently pass away. Trust planning may also allow married spouses within a polyamorous group to take advantage of marital deductions available to defer federal and state estate taxes under Internal Revenue Code §2056 and corollary state laws. As a practice note, keep in mind that while other individuals in addition to the surviving spouse may be beneficiaries of a qualified terminable interest property trust (“QTIP”), only the surviving spouse would be able to have a general power of appointment (the right to direct the disposition of specific trust property) over the trust property. The specific structure of the trust will depend on the preferences and aims of the client. The client can decide how liberal or conversative they want their trustee to be when making income or principal distributions to a surviving partner. The clients can determine whether they want the money held in a common trust share for the benefit of all the partners, or separate shares for each partner, perhaps with different terms. They can name their partners as trustees or choose independent trustees to manage the trust shares. The client also can decide whether they wish to include provisions requiring a partner to enter into a prenuptial agreement to protect the trust share in the event the partner marries (although whether such provisions, or resulting prenuptial agreements, are likely to be enforceable may vary depending on the jurisdiction). The options are vast and varied and can be customized to fit the unique needs of that specific client’s relationship.

For clients with minor children, it is important to include provisions nominating a legal guardian who would care for the children and be legally responsible for them in the event that the client-parent passes away while the children are still minors. Through a will, poly clients can designate which partners they would like to act as guardian, or as backup guardian, of their minor children, although it should be noted that generally the surviving parent, if there is one, will be awarded custody by the court.  Additionally, an unmarried partner may be able to adopt their partner’s biological or adoptive child without terminating the legal parental rights of their partner. This is known as second-parent adoption and is available to unmarried partners in many states and married couples in every state. However, second-parent adoption may not be available if the second biological or legal parent is alive and unwilling to relinquish their parental rights. Further, some states still prohibit unmarried same-sex partners from engaging in second-parent adoptions.[17] Because of this variability in state law, clients should consult with an adoption attorney who is familiar with second-parent adoption to explore the options in their jurisdiction.

Beyond planning for death, an estate planning attorney also can prepare numerous other instruments which would override the default assumptions under state law concerning who can make certain decisions for a client (which typically would be next of kin). These instruments can also help to avoid the need to go to court to seek a guardianship in the event a client becomes incapacitated.

For example, a power of attorney can designate which partners are authorized to manage the client’s finances in the event of the client’s incapacity. There are two general types of powers of attorney, the springing power of attorney and the durable power of attorney. A springing power of attorney “springs” into effect after a specific event, such as the principal becoming incapacitated. In contrast, a durable power of attorney goes into effect immediately and continues even if the principal becomes incapacitated, ending only at the revocation or death of the principal. While springing powers of attorney are appealing to clients because they limit the authority of the named agents, one disadvantage is that they can result in delay while the agent seeks the legal or medical determination of whether the principal is incapacitated, which could potentially take weeks. This could be a big issue if the agent needs access to the principal’s accounts to pay bills, which could also impact the other partners if they share a home and rely on each other’s finances to pay related expenses. There can also be ambiguity regarding what constitutes incapacity, so it is important to include clear definitions in the springing power of attorney. Durable powers of attorney, however, have the benefit of avoiding delay and providing certainty that the agent has the authority to act on behalf of the principal. Because the agent under the durable power of attorney can act immediately and indefinitely, it is imperative that the agent is someone who the principal trusts. In the context of poly relationships, the client should carefully consider whether they are comfortable giving a partner, or multiple partners, control over their finances through a durable power of attorney, or whether they would prefer using the springing power of attorney, despite the risks of delay and uncertainty of when the powers can be exercised. Regardless of which option the client chooses, they should revoke old powers of attorney immediately in the event of a break-up or other change in the relationships that would change who they would name as this agent.

In addition to naming financial power of attorney agents, poly clients should also ensure they nominate agents to deal with health care concerns. A health care power of attorney or health care proxy can allow partners to make health care decisions for a client if the client is unable to act. Without a health care power of attorney designating an agent, the default decision-maker in most states would be next-of-kin, who may not be the person who a client would choose to make health care decisions on their behalf. Additionally, clients should consider executing a Health Insurance Portability and Accountability Act (“HIPAA”) release to permit their partners to access the client’s health care information. In the absence of a HIPAA release, the other partners may not be able to access information from health care providers if one partner were in an accident or in surgery and information may be shared only with next-of-kin.

Additionally, for poly clients who own real estate, such as a primary residence, with one or more partners, a joint ownership agreement can outline the rights and responsibilities of each partner with respect to the property, including memorializing capital contributions of each partner, providing how maintenance and upkeep expenses will be paid, and detailing an exit plan in the event one or more partners no longer want to jointly own the property. If the clients own income-generating property, they should be advised to form a business entity such as an LLC to hold the property and include these terms in the governing documents.

As a reminder for practitioners, irrevocable life insurance trusts (“ILITs”), which transfer ownership of a life insurance policy to a trust to remove the policy from the grantor’s taxable estate in order to reduce the grantor’s potential estate tax, are not limited to traditional nuclear families. ILIT planning is equally available to polyamorous families, as beneficiaries of such trusts need not be related family members. ILITs may be a good option for affluent polyamorous clients seeking to reduce the impact that death taxes may have on their estates, while still distributing wealth to non-spouse partners upon one partner’s death.

While it may take some time for the law to catch up with the realities of relationships in the United States, those in polyamorous relationships are not totally without protection, although it may involve more affirmative work on their part. People in polyamorous relationships should seek the services of an estate planning attorney who is willing to take the time necessary to get to know them and understand their specific goals, and with whom they feel comfortable discussing their relationships and their estate planning needs.  Additionally, because more people are involved, their estate plans may need to be updated more frequently as relationships change or partners pass away. As such, poly clients should consider whether their estate planning counsel offers a maintenance program that prompts them on a regular basis to see whether there have been any changes in their lives that would necessitate updating their estate plans.

Love is not one-size-fits-all and neither is estate planning. Attorneys may need to think creatively regarding solving their poly clients’ problems and use existing tools in new ways, but the key to create an estate plan that works is the same whether or not a client is in poly relationship – listen to the clients and work with them to achieve their goals.

[1] © 2024 Squillace & Associates, P.C. All rights reserved.  Squillace & Associates, P.C. is a boutique law firm based in Boston but doing work regionally and nationally with a particular focus on helping individuals and families in the LGBTQAI+ community.  For more information visit www.squillace-law.com.

[2] Colleen A. Noonan, Esq. earned her J.D. from Boston University School of law and is admitted to practice law in Massachusetts and New Hampshire. She has been an associate attorney at Squillace & Associates, P.C. since 2021. In addition to estate planning, Attorney Noonan also has background in family law.

[3] John E. Zurek, Esq. earned his J.D. from University of Southern California Gould School of Law, is admitted to practice law in California and New York, and has been an associate attorney at Squillace & Associates, P.C. since 2022.

[4] https://polyamorylegal.org/faqs

[5] https://www.apadivisions.org/division-44/resources/consensual-non-monogamy.pdf

[6] Haupert, M. L., Gesselman, A. N., Moors, A. C., Fisher, H. E., & Garcia, J. R. (2017). Prevalence of Experiences With Consensual Nonmonogamous Relationships: Findings From Two National Samples of Single Americans. Journal of Sex & Marital Therapy43(5), 424–440. https://doi.org/10.1080/0092623X.2016.1178675

[7] https://today.yougov.com/society/articles/27639-millennials-monogamy-poly-poll-survey-data

[8] Somerville, Mass., Code of Ordinances ch. 2, art. IX, § 2-502(c). See Jeremy C. Fox, Somerville Recognizes Polyamorous Relationships in New Domestic Partnership Ordinance, Bos. Globe (July 1, 2020, 11:21PM), https://www.bostonglobe.com/2020/07/01/metro/somerville-recognizes-polyamorous-relationships-new-domestic-partnership-ordinance [https://perma.cc/D6BM-F4RM]

[9] https://www.usatoday.com/story/news/nation/2020/07/02/polyamory-massachusetts-city-somerville-relationships-us/5370718002/

[10] Somerville, Mass., Code of Ordinances ch. 2, art. IX, § 2-505(b).

[11] Cambridge, Mass., Municipal Code ch. 2.119. See Cambridge Becomes 2nd US City to Legalize Polyamorous Domestic Partnerships, Polyamory Legal Advoc. Coal. (Mar. 9, 2021), https://static1.squarespace.com/static/602abeb0ede5cc16ae72cc3a/t/604747971135b1744e8a4002/1615284120965/2021-03-08+PLAC+Press+Release.pdf [https://perma.cc/UD8N-NNWW].

[12] Arlington, Mass., Town Bylaws tit. I, art. 23. See Jesse Collings, Town Meeting Approves Domestic Partnership for Relationships with More than Two People, Arlington Advoc. (Apr. 30, 2021, 3:52 PM), https://www.wickedlocal.com/story/arlington-advocate/2021/04/30/arlington-approves-domestic-partnerships-polyamorous-relationships/7410640002 [https://perma.cc/S8B4-52P2]; Pat Murphy, AG Upholds Town’s Recognition of ‘Polyamorous’ Relationships, Massachusetts Lawyers Weekly (January 6, 2022), https://masslawyersweekly.com/2022/01/06/ag-upholds-towns-recognition-of-polyamorous-relationships/.

[13] https://www.law.cornell.edu/wex/polygamy

[14] https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024#:~:text=The%20annual%20exclusion%20for%20gifts,increased%20from%20%2415%2C950%20for%202023.

[15] https://www.irs.gov/instructions/i709

[16] https://www.polyamproud.com/post/learn-about-polyamory-what-is-a-polycule

[17] National Center for Lesbian Rights, Adoption by LGBT Parents (June 2020) https://www.nclrights.org/wp-content/uploads/2013/07/2PA_state_list.pdf.