Estate planning for same sex-couples.
United States Supreme Court decision highlights need for LGBT families to protect their assets.
On June 26, 2015, the United States Supreme Court, by a vote of 5-4, held that same-sex married couples are entitled to equal protection under the law and that their marriages are a fundamental right that must be recognized in all 50 states.1 A triumph for dignity and equality, the decision means same-sex spouses will now enjoy the same spousal rights—and, challenges—all couples enjoy. Many of these benefits occur independent of proactive planning; others, because of it, such as estate planning.
Estate planning has always been a critical component of comprehensive planning for all couples; for same-sex couples, who may be addressing some of these issues for the first time since this landmark decision, the need for planning may never be more important.
Before initiating an estate planning strategy, here are some basics to consider:
Create a will. The best way to make certain your assets pass to those of your desire, is to have a current, valid, written will. Without a will, there could be a chance your property passes to an unintended heir or beneficiary. Since estate distribution rules are largely a function of state law, one must be cautious when considering the distribution of their assets at death; and, seeking the counsel of a qualified estate planning attorney is highly recommended, since outcomes could differ depending upon your state of residence.
Review the titling of your property. No matter how thoughtfully and precisely your will is drafted, if there is a conflict between provisions in your will and the titling of your property, title takes precedence. While this is always an issue requiring careful consideration, it may be more important for same sex couples who are drafting or revising their wills for the first time since the Supreme Court decision.
Create a revocable trust. Assets in a revocable trust avoid probate and probate fees. The revocable trust also provides a private and efficient way to aggregate, manage, and distribute assets at death.
Draw up a cohabitation agreement. If you are not married, a cohabitation agreement clarifies how money and expenses will be managed during the relationship; and, if necessary, how assets will be divided if the relationship dissolves.
Assign powers of attorney. A medical power of attorney is critical if you want your spouse to act on your behalf should you become incapacitated.
Establish HIPAA authorization. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), physicians and hospitals must have a HIPAA release form on file in order to share your health care information with your spouse or activate medical power of attorney.
Create a living will. A “living will,” also known as advanced healthcare directive, enables you to dictate which medical procedures or treatments you want or don’t want, including prolonged life support in the event you have an incurable illness or are incapacitated.
Discuss funeral, burial, and remains planning. Be sure to consider final arrangements well ahead of time. If not, you run the risk of not being buried next to your spouse or your remains not being released to your spouse.
Review 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.
Firm up planning for minors. If you are married and have young children, they must be identified in all estate documents, especially if they are not the legal children of your spouse. If you are not married, special provisions must be made if you want your partner to have primary care for the children in the event of your death.
Know the gifting rules. If you make gifts to any individual—except your spouse—this year that exceeds $14,000, you may inadvertently trigger gift taxes.
Don’t know where to begin? Your local New York Life agent can help you get started by discussing your life insurance and estate planning needs. Click here to have an agent contact you today.
1On June 26, 2015, the United States Supreme Court issued its opinion in Obergefell v. Hodges, the name assigned to a series of consolidated cases on same-sex marriage rights. The Court ruled 5-4 in favor of the petitioners, holding that same-sex married couples are entitled to equal protection under the laws and that their marriages must be recognized nationwide.