6 Tips to Effective Estate Planning for LBGTQ+ Families

Our country has made strides in advancing the rights and equality of the LGBTQ+ community – but, we still have a long way to go before same-sex couples are protected in the same way as heterosexual couples. As laws are being developed to protect everyone equally, it remains important for LGBTQ+ families to take special care in their estate planning in order to ensure that their wishes are followed.

Failure to plan appropriately can result in unintended consequences like a surviving partner being left completely out in the cold financially. The truth is, many laws still give preference to biological and recognized family relationships over same-sex partners. Matters can be further complicated when the LGBTQ+ individual’s family does not approve of their lifestyle, and would be content to just cut a partner out of any inheritance.

To avoid this kind of emotionally painful and financially devastating situation, LGBTQ+ couples should be diligent and proactive about estate planning. A well-designed and executed estate plan can also help avoid probate, which can in turn provide tax advantages as well as ensure your assets are disseminated as you intended.

Here are 6 considerations to keep in mind to ensure your estate plan meets your wishes:

1. Take Stock of Your Financial Situation

No one ever wants to think about the worst-case scenario, but facing that reality head on is an effective way to help protect against dire financial hardship on top of heartbreak. One of the first steps for any couple doing estate planning is to conduct a thorough review of assets and expenses—both as they stand in the present circumstance, and how they would change if either partner died or was incapacitated. Understanding how income would change, which expenses would increase and decrease, and what types of tax ramifications there might be are all important pieces of information to have as you develop a solid estate plan.

2. Know Your Rights

The benefits and rights granted to couples in same-sex marriages, domestic partnerships, and civil unions are not the same. These benefits also vary from state to state, and can change based on new court cases and laws. Before getting deep into estate planning, it’s important to understand exactly what you are entitled to as well as any constraints that might apply to your situation.

3. Create or Update Estate Documents

Many people assume that if they are not wealthy, they don’t need estate planning. That assumption couldn’t be farther from the truth. Estate planning isn’t just about money. It’s about having the power to make your own choices about how you want things handled and how you want to look after the people you love.

A few key documents that you’ll want to review and/or update in addition to your Last Will & Testament are:

- Power of Attorney: This is a document where you authorize someone, often called an agent, to act on your behalf should you no longer be able to do so. Examples include paying your bills or managing your investments. It can be limited to one decision or it can be so broadly written that the agent can do almost anything on your behalf. The authority you give is dependent upon the document’s language.

- Advanced Healthcare Directive: In your advance healthcare directives you will appoint a healthcare representative, sometimes called healthcare agent. This person will act on your behalf to make healthcare decisions if you are incapable. This document also defines the types of medical interventions and life support measures you want—or do not want—at the end of your life. This is called your living Will.

- HIPAA Authorization: The Healthcare Insurance Portability and Accountability Act of 1996 allows doctors and other healthcare providers to share your health condition and records with anyone you designate as authorized to access that information.

- Living Trust: A living trust (“living” because you create it while you are alive), is a written document that will typically explain how you want any money in the trust to be spent during your lifetime and how you want any money in the trust distributed after you die. The grantor, who is the creator of the trust, is typically also the trustee (the one responsible for the fiscal management of the trust’s assets) of the trust while he/she is alive and capable of overseeing the assets.

4. Appoint a Guardian for Your Children

If your family includes children, appointing a guardian of your choice may be one of the most important elements of your estate plan. Depending on the situation, if one person in an LGBTQ+ couple dies or is incapacitated, it is not unheard of for courts to give custody preference to a biological parent or family of origin.

5. Consider Long-term Care Insurance

Just as with thinking about death, no one likes to think about prolonged illness that requires long-term care. But, according to the U.S. Department of Health and Human Services, someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years. Long-term care insurance isn’t for everyone, but it is worth researching. If you do decide to purchase, you want to do your due diligence and evaluate each policy very carefully.

6. Review and Update Your Beneficiary Designations

Even though it’s a pretty quick-and-easy task, people routinely neglect to assign and update beneficiary designations for retirement plans, life insurance policies, and annuities. Beneficiary designations typically become active immediately after death, and they override any instructions that may be in a Will regarding the distribution of assets. For this reason, it’s very important to keep your various beneficiary designations up to date. You probably would not want, for instance, to have a retirement account or life insurance policy to be distributed to an ex-spouse.

Love is love, and estate planning is estate planning.

The bottom line is that estate planning is essential for any couple. In a very real way, making the effort and taking the time to get estate documents in order is a very important way to express your love.

If you have any questions or would like assistance with your estate planning, we’d be happy to help you protect your assets and the financial security of your loved ones. Feel free to drop us a line or call us at (860) 236-7673.

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