Estate planning is one of those things that no family should ever be without. For many LGBT couples, however, estate planning has long been a complicated and difficult thing to manage. Before states began to recognize same-sex marriages, many same-sex couples found that each partner was deemed a separate tax entity for all matters related to taxation. They were also denied the legal protections enjoyed by married couples, which left them in a position in which they were unable to take advantage of the estate planning benefits that the marriage union can provide. And though same-sex marriage is now legal throughout the United States, many LGBT couples are still lacking the LGBT estate planning they need.
Is Your Will Properly Prepared?
If you haven’t taken the time to prepare a will, now’s the time to do so. Your Last Will and Testament should be the centerpiece of your estate planning effort, and can be vital for ensuring that your last wishes are carried out. With it, you can choose your beneficiaries and decide who will serve as the executor of your estate. You can use the will to appoint someone to serve as guardian for any minor children you and your spouse might have, and assign someone to manage any inheritance that you provide for those children.
It’s important to remember that if you don’t have a will then your property will all be distributed using the state’s intestacy laws. That could be problematic in situations where you’re not formally married to your partner, since the laws governing intestate succession don’t recognize unmarried couples as lawful heirs. Without a will in place, you could inadvertently deny your loved one any inheritance at all.
Do You Have the Incapacity Plan You Need?
Incapacitation can be a serious concern for any family – and that includes LGBT families as well. If you or your partner suffer an incapacitating injury or illness, you need to have protections in place to ensure that health care and financial decision-making are unimpeded by the incapacity. Without an incapacity plan, the healthy partner could be forced to go to court to obtain guardianship. That can be avoided with a few simple documents designed to ensure that you always have someone there to make those critical decisions when incapacity strikes.
There are two main documents that every couple should have. The first is the durable power of attorney for finances, which enables you to name another person to serve as your attorney-in-fact if you suffer an incapacity. That document can provide that agent with the authority needed to manage your finances, handle monetary transactions in your stead, and ensure that your financial responsibilities continue to be discharged even if you’re unable to handle those things on your own.
In addition to that power of attorney, you should also have an advance directive for health care. This document includes a power of attorney for health care that allows you to designate someone to serve as your health care proxy when you’re incapacitated, and a living will that enables you to provide instructions about the type of care that you are willing to receive.
Will Your Estate Avoid Probate?
LGBT couples may also want to consider probate avoidance. While probate is an important part of society’s estate settlement process, it can involve extensive delays and costs that some couples may want to avoid. There are many different options available for this, including the use of things like trusts, joint tenancy, and transfer-on-death account designations. These techniques and tools can help to provide another option for transferring wealth from you to your heirs, without the excess costs and delays that accompany the probate process.
Have You Considered Estate Tax Planning?
Depending on the amount of wealth that you and your partner have in your estate, you may also need to take steps to ensure that you guard against estate tax implications. While the estate tax exemption is high – the current exemption is $5.49 million, after all – it can still sometimes impact people who never expected their estates to be subject to the tax. If you and your spouse haven’t examined how the estate tax might affect your wealth, it’s never too late to start.
The good news is that married LGBT couples can take advantage of important provisions in the tax law like portability, or can use bypass trusts and other tools to control how estate taxes are managed. Irrevocable trusts can shield assets from the tax, and ensure that your wealth remains in your family rather than in the government coffers.
Married LGBT couples can also make use of gifting strategies that can effectively double the amount of wealth that they can give away each year. That can come in handy when you’re trying to reduce the size of your estate by providing loved ones with inheritances early. Instead of being limited to the $14,000 per person limit, you’re able to benefit from the law for married couples and effectively double that gift.
Don’t Assume That You’re Covered
Many LGBT couples can easily find themselves making the same mistakes that married couples have always made when it comes to estate planning. If you assume that getting married meant that all those important incapacitation and inheritance issues suddenly resolved themselves, think again. You still need to formally address your estate planning concerns to ensure that you and your family are properly protected. Medicaid planning, asset protection, and other vital estate planning issues all need to be dealt with as part of your comprehensive planning effort.
At Frank & Kraft, Attorneys at Law, we can help to ensure that you have the LGBT estate planning you need to provide yourself and your loved ones with the protection and peace of mind you deserve. We’ll work with you to evaluate your current circumstances, appraise your needs, and select the best options to help you meet your critical estate plan goals. To learn more about how comprehensive estate planning can help to safeguard your interests, call today at (317) 684-1100, or contact us at our website.
- How to Find the Right Caregiver for a Parent - September 27, 2022
- What You Need to Know about Elder Financial Exploitation - September 22, 2022
- Using a Letter of Instruction to Supplement Your Estate Plan - September 20, 2022