The 2015 Supreme Court ruling that guaranteed the right to same-sex marriage in every state gave LGBTQ+ families nationwide access to new legal rights and protections. But even with laws in place, there are special considerations when it comes to estate planning for LGBTQ+ couples because the rules can vary so much by state. Here are five tips that can help.
SET UP AN ADVANCE HEALTH CARE DIRECTIVE
Your advance health care directive is typically composed of two things: a living will, which details what kind of medical care you would want if you were incapacitated; and a durable medical power of attorney, also known as a health care proxy, which assigns someone to make medical decisions on your behalf if you’re unable to.
A durable financial power of attorney is also good to put in place — this appoints someone to make financial decisions for you if you’re too ill to do it yourself.
It’s important to have this paperwork established, especially if you aren’t married. “You want to make sure your partner legally has the powers you want them to,” says Dan McLennon, senior attorney for advanced planning at Northwestern Mutual.
Also, discuss with your spouse or partner who you would appoint as an alternate for each of you, if either of you were unavailable to make a medical decision.
DISCUSS A PLAN FOR YOUR ASSETS
Both a last will and testament and a trust can be used to spell out how you want to divide up your assets, and to whom, after you pass away. One major difference: A trust doesn't have to go through probate, which means it stays private and doesn’t have to complete court proceedings to go into effect.
With a trust, you can also appoint a trustee to oversee that the terms of the trust are executed properly; the trustee can be you while you're alive, and you can appoint someone (such as your spouse, partner or financially savvy friend) to take the role in the event of your death.
Setting up a will or trust provides a good opportunity to discuss what kind of legacy you want to leave behind with your assets. “You want to decide who or what is meaningful in your life,” McLennon says. For instance, are there charities or mission-based organizations you want to support? If you don’t have children (or even if you do), are there other extended family members or friends you want to leave gifts for? It’s never too soon to start asking these questions.
CHECK YOUR BENEFICIARIES
Check whom you've chosen as the beneficiaries for your various financial accounts, everything from life insurance policies to bank accounts to retirement accounts. Beneficiary designations override what you've outlined in your will so if, for instance, you state your spouse should receive any life insurance death benefits in your will, but you still have an ex-partner listed in your policy, the ex would get the benefit. It's key to check your beneficiaries regularly to ensure they reflect your wishes.
HAVE A PLAN FOR YOUR KIDS' CARE
Not only does a last will and testament spell out what you want to do with your assets after you pass away, it also appoints a guardian for your minor children, other dependents or pets. The will or a trust can then be used to carry out the financial care of your kids to your specific wishes, like if you want them to receive the bulk of your assets after they reach a certain age.
Having formal documents that lay out your wishes is particularly important to avoid any possible conflict over who should care for your children if one or both of you pass away. For example, if the biological parent of a child dies and the surviving spouse hasn’t formally adopted the child, don’t assume they automatically become the guardian, cautions McLennon — the laws around this will vary by state.
It’s also important not to put off appointing a guardian to care for your kids if both of you were to pass away. This helps ensure that you’re choosing a friend or family member who shares your values and can continue to raise your children with them.
ALWAYS WORK WITH A PROFESSIONAL
While it might be tempting to DIY your will and other legal documents, working with estate planning professionals — like attorneys, tax advisors and financial advisors — who have worked with other LGBTQ+ families is key because every state will have its own laws.
For instance, if you and your partner were domestic partners prior to the 2015 Supreme Court ruling, some states might recognize that domestic partnership the same as a marriage. States will have different laws when it comes to the rights of a non-biological parent. And some require multiple witnesses to a will, while others don’t.
“Follow every state law to ensure you have rock-solid married status and a legally binding will,” McLennon says. “Ask friends or seek a recommendation from a group you’re affiliated with. All estate planners should be well-versed in the mechanics, but you also want to choose someone with whom you can develop a rapport to ask the key questions.”