Estate planning often entails many hurdles to navigate through an increasingly complex legal system. These challenges can be especially pronounced for LGBT couples for a variety of reasons, including marriage, divorce, and more.
Estate planning is the process of writing a will or a prenuptial agreement that decides how assets and property will be divided upon death. There is a common misconception that estate planning is reserved for people with extensive wealth, but this is simply not true. In reality, estate planning is a legal contract almost all spouses can benefit from. Critically, proper estate planning can protect your family from the IRS upon death, minimizing the tax burden of transferring your assets while your loved ones are at their most vulnerable.
Unfortunately, estate planning is not always easy, especially for members of the LGBT community. With same-sex marriages legally recognized in all 50 states, many people wonder why there are still challenges for same-sex couples. Unfortunately, while the government can create a law, there are cities, businesses, and people who still refuse to recognize these couples. The result is unnecessary challenges for couples who simply want equality and to do the right thing for their family.
Married v. Unmarried Status For LGBT Couples
Many states now recognize same-sex couples and provide the same estate planning options afforded to opposite-sex couples. However, couples that are not recognized as legally married have less freedom in terms of handling property transfers, taxes, and gifts.
During estate planning, it is important to consider whether your marriage is legally recognized in relevant states. If your spouse becomes ill or dies while a resident in a state that does not recognize same-sex marriage– even if you were legally married in a state that does– then you may face challenges in making decisions and handling their assets. For legal counseling regarding your state’s estate planning laws, contact an estate planning attorney.
What Makes Up a Robust Estate Plan?
When starting to create a plan for your estate, you should start with a few, early steps:
The Will
The most important and foundational step is creating a will that outlines where assets will go, who will receive what, and what will happen to numerous other assets that could be divided. In California, when someone passes away “intestate” (without a will), California law takes over and determines the division of assets automatically.
The Living Trust
A living trust is also a necessary feature of a robust estate plan. A living trust works the same way as a will does, but a living trust takes effect immediately, not just after death. Like a will, a living trust can help you predetermine what happens to your assets upon your death or incapacitation, such as who or what will be in charge of your company. Unlike a will, however, a living trust places all of the prescribed assets in the trust immediately, making it so that you do not personally own them. This is helpful because, among other reasons, the person(s) named as your successor trustee(s) simply take over upon your death or incapacitation, without having to deal with probate (the traditional system by which a will passes on your assets to your heirs).
Notably, a living trust may be revocable or irrevocable, they are typically constructed so that you can revoke them at any time. Revocable trusts could be more useful than irrevocable trusts in many circumstances. For example, if a person loses a large portion of their income, or wants to change their trust, they would be able to do so. Irrevocable trusts are primarily designed for wealthier people, who may want to protect certain properties from divorce, keep certain properties to themselves, or ensure an asset goes to a specific person.
The Healthcare Directive
An advanced healthcare directive provides a plan in the event of your incapacitation. A living will (note the difference from a living trust) is a common form of an advanced healthcare directive, through which you provide specific instructions regarding your end-of-life decisions. It addresses specific medical decisions so that your loved ones don’t have to.
More generally, a healthcare power of attorney (another form of healthcare directive) can determine who gets to make these decisions. Even if you and your partner have discussed your wishes, if you do not have a healthcare directive naming them as your healthcare power of attorney, then they cannot legally make decisions on your behalf. This can be traumatic for same-sex couples whose marriage is not recognized or whose partnership is questioned. Granting a healthcare power of attorney can ensure your loved one will be able to make critical decisions on your behalf.
To ensure your healthcare directives are in order, contact an estate planning attorney. LGBT couples often find themselves financially impaired after a loved one’s death due to confusion regarding their healthcare directives. It is between you and your loved one to decide who has a healthcare directive and healthcare power of attorney.
Healthcare Directives
Even if you and your partner have discussed your wishes, if you do not have a healthcare directive naming him or her as your power of attorney, then they cannot legally make decisions on your behalf. This can be traumatic for same-sex couples whose marriage is not recognized, or whose partnership is questioned. Having a healthcare directive and power of attorney allows your spouse or partner to make decisions on your behalf.
To ensure your healthcare directives are in order, contact an estate planning attorney. LGBT couples often find themselves financially impaired after a loved one’s death due to confusion regarding their healthcare directives. It is between you and your loved one to decide who has a healthcare directive and power of attorney.
What information do I need for estate planning?
The ideal estate planning checklist will include all of your personal and valuable items, and it will identify their respective values. This could include anything, such as watches, homes, stocks, and bonds. It’s important to list all of these items out to ensure that nothing will be lost or split in ways you don’t want. This can ensure nothing will be lost or given to the wrong person.
Of course, the reality isn’t so simple, and your possessions often change between when you draft your estate plan and when you pass away. Therefore, flexibility in drafting is key, with references to percentages that overarch any specific bequeathals.
Finances
The status of a “spouse” does not on its own give your spouse the legal ability to make financial decisions on your behalf. LGBT couples can overcome this challenge by establishing a financial power of attorney. This allows your spouse the ability to make decisions.
With same-sex marriages legally recognized in all 50 states, many people wonder why there are still challenges for same-sex couples. Unfortunately, while the government can create a law, there are cities, businesses, and people who still refuse to recognize these couples. The result is unnecessary challenges for couples who simply want equality and do the right thing for their family.
Contact Us
If you or a loved one is seeking to plan his or her estate, contact us at Pride Legal to get in touch with one of our LGBT estate planning attorneys. To protect your rights, hire someone who understands them.
