It is important for all couples to have an estate plan, but it is critical for same-sex couples. Federal law does not recognize same-sex marriages, regardless of state law, so even married same-sex partners will not receive the same federal income and estate tax treatment as traditional married couples. Moreover, the majority of states do not recognize same-sex marriages or domestic partnerships, and even those that do may not provide for automatic inheritance to domestic partners. At the minimum, same-sex couples should carefully consider the following:
- Will. You may be familiar with the intestacy laws of your state, but without a will, these laws may adversely affect lesbian and gay couples. Generally, “heirs at law” are blood relatives or adopted children. Without a will, your domestic partner may not be entitled to any of your assets, even assets you may jointly own!
- Revocable Trust. This type of trust may provide protection from challenges by disgruntled heirsat law. Moreover, assets in a revocable trust pass outside of probate, providing privacy as well as eliminating probate fees. Implementing a revocable trust today may mean more money to your loved ones later on.
- Cohabitation Agreement. If you have a spouse or domestic partner, you should consider this cross between a prenuptial agreement and a partnership agreement. Not only can the contract dictate how money and expenses will be managed and divided, but it can also define the duties and responsibilities of each of you, which may very well reduce taxable gifts.
- Powers of Attorney. A medical power of attorney will be especially important if you want your partner to act for you should you become incapacitated. You may also want to consider a separate power of attorney over your affairs, such as businesses, finances and real estate.
- HIPAA Authorization. In the past few years, the law has changed and people have a higher right to privacy regarding their health information. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), specific authorization is now generally required to permit medical personnel to release “protected health care information.” Potentially this could create a problem when the physician needs to release medical information in order to activate health care powers of attorney.
- Advanced Directive. A “living will” enables you to provide instructions relating to prolonged life support in the event of incurable illness.
- Funeral, Burial and Remains Planning.You should make plans regarding your funeral, burial and/or remains or your final wishes may not be granted. You may not be buried next to your partner or he may not receive your remains. If there is family tension, a surviving partner may even be excluded from your funeral.
- Proper Beneficiary Designations. Ensure that beneficiary designations are up-to-date and are in line with your wishes. Be sure to consider banking, investment, and retirement accounts, as well as life insurance policies.
- Planning with Minors. Lesbian and gay couples with minors have special issues that traditional families may not have to consider. Drafting attorneys need to adequately identify the children in all estate planning documents, especially if they are not the legal children of one partner. Moreover, gifting issues will have to be addressed when dealing with children who are not legally adopted by one partner.
- Gifting. If you have spent more than $13,000 per year in gifts, services or support for your partner, you may have inadvertently triggered gift taxes.
This writing is provided for informational purposes only. New York Life Insurance Company, its agents or employees may not give legal, tax or accounting advice and none is intended nor should be inferred from the foregoing information. We must necessarily insist that everyone seek and rely upon the guidance of their own professional counsel for such advice and that such advisors must form their own opinion on these matters based upon their independent knowledge and research.