Since the Supreme Court legalized same-sex marriage in 2015, it would be easy to think that estate planning for LGBTQ+ couples would be just like heterosexual couples. However, same-sex couples may have situations that require extra or special planning, such as adoption by non-biological parents or navigating unsupportive family dynamics. Estate plans for same-sex couples could be more vulnerable to contests from family members who don’t recognize the validity of the couple’s relationship, they could challenge custody over non-biological children if the biological parent passes away, or they could interfere with a spouse’s ability to make medical and financial decisions for their partner.
Here are 5 tips for smart estate planning for LGBTQ+ families:
1. Resolve prior legal arrangements from before 2015. Prior to 2015, not all states recognized same-sex unions. Some same-sex couples traveled to states that recognized their union, even though they lived in another state. If this couple separated, they may have thought that the prior wedding “didn’t count” – but never took the steps to legally dissolve their legal relationship. In some states, including Washington State, these relationships were automatically converted into legal marriages, which means former couples could be legally married and not know it. This opens the door to future claims against their estates by their now-ex-partner.
2. Make sure your assets transition according to your wishes. If you are in a serious romantic relationship, but aren’t legally married, and pass away without will, the law of intestacy of the state where you live will determine who gets your assets. These rules vary between states, but rarely are domestic partners included – which means your partner may be excluded completely. On the other hand, you can make full use of the unlimited marital exception for estate taxes, and same-sex spouses can also roll over assets from their deceased spouse’s retirement account.
Similarly, there are many significant assets that don’t pass through your will, including life insurance and retirement accounts. Make sure your beneficiary designations are accurate.
3. Remember to plan for end-of-life care. Because same-sex couples tend to be challenged more often than heterosexual spouses when they need to make medical and financial decisions for partners who are incapacitated or unable to communicate, it is particularly important for same-sex couples to document their wishes. At a minimum, this includes a durable financial power of attorney to manage financial affairs, a health care power of attorney to make medical decisions on your behalf, a HIPAA authorization form that allows doctors and other medical professionals to disclose pertinent health information to your designee, and an advance health care directive regarding the kinds of care you want and do not want to receive at the end of life.
4. Name your spouse as the guardian for your children. This is particularly important for the non-biological parent, who should also consider adopting that child. Adoption also plays an important role in the transfer of assets after death. If the non-biological parent wants their estate to pass to their children, adoption is should be seriously considered.
5. Review real estate documents and make sure ownership is listed according to your wishes. Tenants in Common gives both individuals a share in ownership of the property, but allows each to will their shares to someone else in the event of their death. Joint Tenants with Rights of Survivorship means that both individuals are owners, but if one passes away, the other will automatically gain sole ownership.
Proper estate planning is critical to ensuring your wishes are carried out. These are issues that can be complex, and even more so for the LGBTQ+ community. It is important to work with a knowledgeable estate planning attorney to make sure your unique needs are met. Reach out today to schedule an appointment to discuss your unique estate planning needs.
