What Same-Sex Partners Need To Know About Estate Planning

By Filomena Gomes

Some people might assume that estate planning is only for the wealthy, but the reality is that anyone can, and should, engage in estate planning, regardless of wealth. Although creating an estate plan for same-sex couples isn't wholly different than for heterosexual couples, there are some considerations that are unique to same-sex couples.

Proper estate planning can help ensure clients’ wishes are carried out exactly as intended in the event of a death or a serious illness, as having a clearly stated plan in place can provide clear direction and potentially avoid any disputes that otherwise might occur. For same-sex couples, this may be even more crucial.

The 2015 U.S. Supreme Court ruling guaranteed the right of same-sex marriage in every state, which gave same-sex couples new options to legally protect their assets and families. If your client is not married, a sound estate plan will be the legal protection needed in order to guarantee your client’s intentions are followed because rules can vary state by state. Helping your client get started as soon as possible helps make the estate planning process much easier and gives clients the confidence that their plan is comprehensive and legally binding.

Items To Include

Any estate plan should include a will or trust, beneficiary forms, powers of attorney, a living will and a letter of intent. Along with that, I advise my clients to include a secure document with a list of accounts, debts, assets and contact numbers for any key people involved in those accounts. The list should contain passwords for locked accounts and any other relevant information.

Including a will in estate plans ensures your client’s wishes after passing away. This alleviates your client’s families from the responsibility of figuring out how to divide assets and takes the guesswork out of how to pass along belongings and treasured heirlooms. The will or trust might also specify how your client wants financial assets distributed to their children. Many parents prefer to put money into a trust that can be accessed when children reach a specific age.

I also work with my clients to be sure their beneficiary forms are up to date with their spouse for any life insurance policies, bank accounts and retirement accounts. Beneficiary forms will overrule any decision written out in a will, so it is important to help your client make sure those are current, especially if your client has a former partner that may have been previously named in the policy.

For same-sex couples, it is particularly important to state a clear medical power of attorney and create a living will that dictates any medical directives should they become incapable of making those decisions on their own. If your client is not married, this will give their partner the legal protection they need in order to make those decisions. It is important for your client to take time to have those conversations with their partner so that the plans and directives are clear. I tell my clients to let their family know of the intentions as well, so they are aware of the established decisions.

A letter of intent is a written, personal note that can be included to help state their wishes and offer reasoning for the decisions.

Protecting The Children

In the forefront of every parent’s mind is how to protect their children. For clients who have children under 18 years old, their plan should name a legal guardian for them in the event that both parents die. Same-sex couples must make sure that both parents have equal rights, especially in a case where one parent is the biological parent. If the surviving spouse or partner is not the biological parent and has not legally adopted the children, it should not be assumed that they will automatically be named guardian — those rules also vary from state to state. The best protection one can leave their children is to be proactive in appointing a guardian and confirming that both parents have the same legal rights.

Dissolve Old Unions

While legalizing same-sex marriage has given couples better protections for their assets and families, there could be challenges if your client entered into a civil union or domestic partnership before marriage was legalized. Prior to the 2015 marriage equality ruling, some same-sex couples married in states where it was legal, but resided in states where the marriage was not recognized. If your client and their partner broke up, but did not legally dissolve the union, it may still be legally binding. Furthermore, some states converted civil unions and domestic partnerships to legal marriages, so your client and a former partner could be legally married without realizing it.

If a former union was not with their current partner, make sure your client legally unbinds it to avoid any future disputes on their estate.

Check Real Estate Documents

Similar to making sure both your client and their spouse have equal custody rights to their children, it is important to encourage your client to check their real estate documents to confirm that both partners are listed and have equal rights to home ownership, especially if the home was purchased prior to the legalization of same-sex marriage or if they aren’t married. There are a few options for how to split ownership of their property.

Tenants in common: This states that both partners share ownership of the property, but allows each individual to leave their shares to another person in their will.
Joint tenants with rights to survivorship: In this path, both partners are property owners but if one dies, the remaining partner retains sole ownership.

Estate planning can be a complex process, and same-sex couples might feel additional pressure to ensure they have a legally binding plan. However, helping same-sex couples through the estate planning process, familiarizing them with the laws in the state where they live and, ultimately, putting a proper plan in place can help provide peace of mind knowing their family is protected.

Filomena Gomes, RICP, is a Northwestern Mutual financial advisor in Orlando, Fla. She may be contacted at [email protected].