Gay, lesbian, bisexual, and transgendered persons typically have to be proactive and more vigil in their long term care and estate planning than do heterosexuals. This is because GLBT persons don’t have the same rights under federal law and sometimes even in private society.
A major area of discrimination is that GLBT persons are typically denied rights, benefits, and protections that come with marriage. The Defense of Marriage Act allows federal law to discriminate against same sex couples, even if a particular state treats you as married. This results in concrete disadvantages to GLBT couples including:
- Social security—GLBT persons can receive social security benefits as individuals, but may not be eligible for lower earning spouses and surviving spouses benefits;
- Taxes–Same sex couples cannot file joint federal tax returns, utilize the tax-free property transfer allowed between husbands and wives (the survivor would have to pay tax on it) or the marital deduction given to the surviving spouse. All of this results in possible loss of thousands of dollars (or more) to the survivor;
- Pension income–Some pension plans do not allow same sex partners to receive pension income after the death of the retiree, although some states and plans do allow this.
One area where there has been success is with 401Ks and 403Bs. As of January 2010, these plans are required to allow a non-spouse beneficiary, including a same sex partner, a parent, or sibling, to roll over inherited benefits tax free to an IRA.
Despite these limitations, same sex couples can create safety nets for themselves and their loved ones. There are a number of things you can do—legal documents, investments, insurance, and certain ways of owning property–to protect your chosen family and your wishes. Make sure you contact your estate planning attorney, who will help you understand these challenges and successfully navigate around them.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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