Irrevocable Trusts for a Partner (Significant Other)

If you set up an insurance trust for the benefit your partner what happens if the relationship ends? Can you use a definition of “partner” to be akin to the “floating spouse” definition some married people use in their trusts? A “floating spouse” provision in a trust provides that whoever you happen to be married to at the time the trust terminates is the beneficiary of the trust. This gives considerable flexibility in irrevocable trusts.

Can you use a similar concept for a “floating partner”? One concern is that the phrase is hard to define. When is someone your “partner” and when aren’t they? At what point does someone become more than a friend, and reach the status of “partner?” The vagueness of the term might create a risk of the trust assets being included in your estate for tax purposes and within reach of your creditors-something you were probably trying to avoid from the start. One solution might be to define your “partner” as a partner registered under, for example, the NJ Domestic Partnership Act, or a similar law in another state. This way, that similarly to the way you are registered when you are married, you are registered as having a legally recognized partner. Another approach might be to have a trust protector appointed who may designate a partner. You can tell that protector who and under what conditions, you consider someone to be your partner thereby ensuring that your money does not get into the wrong hands.