The Supreme Court’s recognition of same-sex marriage in 2015 opened many rights and opportunities for same-sex couples. But many situations still need special planning.
Estate planning for same-sex spouses has some special complications. Their estate plans can be sabotaged by an unsupportive family member mounting a will contest that may not recognize their marriage’s validity, custody battles over non-biological child or disputes over who will make decisions when a person becomes incapacitated.
Wills help assure that assets are properly distributed, especially for same-sex couples who are unmarried and face a greater risk of being disinherited. This poses a risk that the assets may go to surviving spouses, parents, children, and other relatives under state intestacy laws instead of their same-sex partner or spouse.
Beneficiary designations on retirement accounts and life insurance polices must be current. Too often, these assets go to unintended beneficiaries because these policies and funds were forgotten. The named beneficiaries receive these assets regardless of the will’s directions.
Other planning options include creating a trust which can protect assets and avoid probate. This may be costly, however.
Adding a no contest clause to a will or specific language into a will explaining your decisions may discourage a will contest. Keeping old estate documents shows consistency in your wishes to contest fraud or undue influence allegations.
Same-sex couples must document their wishes concerning end of life care or incapacity to avoid confusion and challenges. These documents are important:
- Durable financial power of attorney designating an agent to handle your financial affairs if you are incapacitated.
- Health care power of attorney designating a person to make health care decisions on your behalf if you cannot.
- HIPAA authorization which allows providers to disclose health information and records to a designated agent or trustee.
- Health care directive which specifies your desired type of end-of-life care.
Estate planning documents should identify a child born into or adopted into a same-sex union. This helps prevent confusion over issues such as awarding guardianship.
Non-biological parents may also consider adoption, especially if the child was born before their marriage. This helps establish a legal relationship which can prevent custody battles and ease the child’s inheritance.
Couples should also address:
- Taking advantage of the unlimited marital deduction for federal estate and gift taxes.
- Rolling over assets from a deceased spouse’s retirement account into their account with required minimum distribution or lump-sum distribution.
- Determining whether arrangements before the Supreme Court’s 2015 decision, such as registered domestic partnerships or civil unions, are now legal marriages to protect their estate and legal interests.
Attorneys can advise couples on these issues. They can also help them prepare or update estate documents.