By Attorney Rebecca Spinner, Esq.
In 2015, the United States Supreme Court issued a decision in the landmark case, Obergefell v. Hodges, legalizing same-sex marriage in all 50 states. In the estate planning world, this means that LGBTQ+ couples that marry can now take advantage of all of the planning options offered to married people. However, for couples who may have had been married before the 2015 federal law was passed, their estate plans need to be carefully reviewed to make sure that they are taking full advantage of federal and state estate, gift, and income tax planning. For example, same sex couples are now entitled to the unlimited marital exemption for federal estate and gift taxes.
Another important point is that prior to the 2015 ruling, many LGBTQ+ people may have entered into domestic partnerships with previous partners in states where gay marriage was not recognized. Unfortunately, as with traditional straight couples, some of those unions broke up… and they did nothing about formalizing the dissolved union. What those couples may not know, is that many states automatically recognized those domestic partnerships as marriages once the federal law went into effect. So, even if they went their separate ways, that domestic partnership (now in some states marriage) is still very much legal and binding. In order to resolve this, a couple must first make sure that all prior relationships, domestic partnerships, civil unions, and other legal arrangements, are no longer valid. Because if they don’t, their previous partner could file claims against their estate, should anything happen. As an estate planning firm, our goal is to make sure that your estate is protected. This may require some time and effort. We also recommend that any beneficiary designations on individually owned accounts (insurance policies, IRAs, 401Ks, etc.) should be double checked to make sure that they are current and up to date. No one wants an ex-spouse to receive an accidental inheritance because of a preventable oversight!
LGBTQ+ couples and individuals are no different from anyone else, in that they will need the basic, foundational Estate Planning documents that everyone needs! These are as follows:
What makes Estate Planning unique for the LGBTQ+ community is when there are children involved. Sometimes LGBTQ+ families are blended families, melding biological children and stepchildren together. The unique part is when an LGBTQ+ couple are married and have a child together, and only one parent is the biological parent. In many states, the non-biological parent would have to adopt the child in order to be considered a legal parent. This is often referred to as “second parent adoption”. Even in states that do recognize both parents as legal parents, it can often be a good idea to pursue a second parent adoption to guarantee that the non-biological parent will still be considered a parent no matter where the family goes. Sometimes families move out of state to find that they are not recognized as a legal parent in their new home. This is why second parent adoption is often a smart idea. If that step is not taken, in case of a sudden death, the non-biological parent could potentially face a custody battle with their partner’s family. And if a family is unsupportive of your union, you may be at higher risk of other potential family battles down the line. Second parent adoption also ensures that the child will be considered your legal heir for Estate Planning purposes. If you choose not to pursue second parent adoption, there are still ways to ensure that your child is included in the event of your death. By having the appropriate Estate Planning documents in place, such as a Last Will and Testament or a Trust, you can be certain that your child, whether adopted or not, will receive whatever you’d like them to after your passing.
As with any other couple, Estate Planning documents can provide you with protection in the event of incapacity, they can minimize Estate Taxes, provide creditor protection for your beneficiaries, protect assets from the cost of long term care, protect disabled beneficiaries and so much more!
If you do not yet have an estate plan in place, or if it’s been a while since you’ve had your plan reviewed, I highly encourage you to reach out to an Estate Planning attorney to get started. Preparing in advance can provide you with the peace of mind that during your incapacity, or after your death, your wishes will be adhered to.