Laurence Hale, AAMS®, CRPS®
Principal/Managing Partner, Investment Advisor & Chief Investment Officer
The LGBTQ+ community faces many challenges to estate planning. Family issues and differing laws between states can make the process of planning more complicated. In an effort to protect assets, members of the LGBTQ+ community must go through extra steps to establish an estate plan. Consider the following to make sure your wishes are followed. Keep in mind, the tips below are recommendations, the complexities of estate planning should always be discussed with an advisor or other financial professional.
Consideration #1: States and The Benefits of Marriage
The supreme court case Obergefell vs. Hodges legalized marriage between LGBTQ+ couples at a federal level in 2015.1 However, couples may be affected by state laws set in place prior to, or in response to, this law.
Beyond the cultural and celebratory factors of marriage, there are other logistical benefits to it that can vary by state. Those benefits that can impact estate planning include:2
- Filing joint or separate status: This can create possible tax breaks which can help couples accumulate wealth over time.
- Access to unlimited marital deduction: which allows married couples to make unlimited interspousal transfers of property without incurring a tax, either during their lifetimes or after their deaths.
Consideration #2: Establishing a Will and Distributing Assets
Studies suggest that individuals within the LGBTQ+ community are less likely to have a will when compared to non-LGBTQ+ individuals.3 This may be due to the added complexity of estate planning. But, the importance of a will to protect assets cannot be understated. There are a few options to protect your will against being challenged. The option you select will depend on your circumstances, and it is always best to consult with a financial professional before deciding.
Two potential options for protecting your will include:4
- Establish a no-contest clause: A no-contest clause is a clear statement that explains the wishes of the deceased and their reasons for setting up their estate in the manner that they did.
- Establish a trust: Trusts can provide more protection than a standard will to ensure your wishes are protected.
Consideration #3: Ensure Custody Protection
At times, the custody of minor children may be challenged. A will should be established to protect against this. But as added protection, non-biological parents should file for legal adoption. This not only provides a level of custody protection but also makes the process of receiving an inheritance easier if the non-biological parent were to pass.4
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Consideration #4: End-of-Life Care
For LGBTQ+ couples, handling your end-of-life issues may be very important, especially if you aren’t married. Making decisions for a spouse or partner in a time of need can be difficult and complicated, and; even more so for unmarried couples, who may not automatically be the legally recognized decision-maker. Documenting your preferences for care may make a huge difference. A will is a great starting point but is by no means the only documentation that may help ensure that your end-of-life wishes are respected.4
There are several types of documents that may help with your estate strategy:4
- Durable Financial Power of Attorney: A durable financial power of attorney designates someone (your spouse or partner) to make financial decisions on your behalf should you be unable to do so.
- Health Care Power of Attorney (or Health Care Proxy): If you are in a domestic partnership and unmarried, a health care power of attorney may be used to designate your partner or spouse as being able to make medical decisions on your behalf.
- HIPAA Privacy Authorization Form: This form allows doctors and other medical staff to communicate with your partner about your medical condition. Your power of attorney and/or trustee will also need this information as proof of your medical condition.
- Health Care Directive: This outlines what types of health care measures you would like if you are unable to speak for yourself.
Consideration #5: Protecting Real Estate
Property ownership is a large portion of estate planning. There are a few options for LGBTQ+ couples to ensure vested property rights for both individuals in the event of one passing.
Such options include:5
- Joint tenancy with the right of survivorship
- Tenants in common
- Tenancy by the entirety
- Community property
The availability of each of these options for LGBTQ+ couples varies depending on your state. Be sure to consult a real estate professional and financial advisor before moving forward.5
Consideration #6: Previous Relationships
The fluctuating nature of LGBTQ+ marriage laws over time has resulted in confusion. Changing state laws may have redefined the legal definition of a couple’s relationship, converting their marriage to either a civil union or domestic partnership.
In addition, prior relationships could affect individuals. For example, if a married individual split from their partner, then moved to a state that does not recognize LGBTQ+ marriage, their union would still be deemed legal. Both of these situations can cause estate planning challenges.
The complexity of estate planning for many LGBTQ+ couples can make the process challenging and stressful. A financial advisor or other financial professional can help ensure the process is clear and provide the information and actions needed to establish proper planning. If you’d like help creating a strategic financial plan to help meet the estate, financial and life goals that you and your partner share, our team at Weiss, Hale & Zahansky Strategic Wealth Advisors can help. We use our strategic Plan Well, Invest Well, Live Well™process to help our clients create a financial plan that's tailored just for them. Contact us at (860) 928-2341 or schedule a complimentary consultation on our website.
Presented by Principal/Managing Partner Laurence Hale AAMS, CRPS®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.