Estate Planning LGBTQ+

Estate planning for LGBTQ+ individuals

Oct 12, 2022
Empower Insights

Tips to help you provide for your loved ones after you’re gone

Thinking about what happens to your home and family after you’re gone is nobody’s idea of a good time, but estate planning is important for everyone concerned with providing for their loved ones over the long term. For LGBTQ+ individuals, estate planning can be more complex than it is for the general population. From the impact of taxes to the legal recognition of your relationship, it’s important to be prepared.

What is estate planning?

Estate planning is the process of making legal arrangements for what will happen to you and your assets after your death. Not only is a solid estate plan an important step toward financial wellness, but it can also provide peace of mind for both you and your loved ones.

Estate plans typically include a will along with medical and financial directives. You may also wish to establish trusts for your beneficiaries. Whatever your circumstances, the intent of a good estate plan is to maximize the amount of wealth you leave to your loved ones (and potentially to charities).

A comprehensive estate plan will answer a number of important questions, including:

  • Who will inherit your assets?
  • Which beneficiary will receive which assets, on what timeline and under what conditions?
  • If you have minor children or a family member with special needs, who will be appointed guardian?
  • If you become disabled or incapacitated, who will be able to make medical decisions on your behalf?
  • Who will manage your estate?

Keep in mind, estate planning is an ongoing process. As your life circumstances change over time — perhaps you get married, have children or acquire property — you’ll want to keep your estate plan up to date.

Why is estate planning important?

When you devote so much time and effort to building relationships and being careful with your money while you’re alive, it’s natural to want that same level of care after you’ve passed on. Proper estate planning can help ensure that your loved ones are cared for and your property goes to the right parties. You may also wish to bequest assets to charities that are important to you.

In short, a well-crafted estate plan can help ensure that your assets will go to the beneficiaries you choose on the timeline you specify while minimizing any associated taxes.

Estate Planning LGBTQ+

Estate planning concerns for LGBTQ+ individuals

For LGBTQ+ individuals, estate planning can be especially complex, and different challenges may arise depending on the jurisdictions in which you live. Whether you are married, single or in an unmarried partnership, you’ll want to have a firm grasp on what you are legally entitled to.

Determine your legal protections

Marriage provides spouses legal rights to property, but domestic partnerships and civil unions do not always have the same kinds of legal protections as marriages. As a result, if your partner should become hospitalized without the proper estate planning documents in place, you may not be able to speak on their behalf if you are not married. And if they should die, you may not be entitled to their assets either, regardless of how long you have been together.

Inheritance laws usually default to bloodlines. Whether married, partnered or single, LGBTQ+ individuals in strained or estranged family relationships may wish to establish an estate plan that ensures that healthcare decisions, custody of children and control of assets and property is in the hands of those they love and trust.

Protect your parental rights

If you have children, protecting your parental rights is a crucial part of estate planning. If you or your partner are not a biological parent to your child, being legally married may not be enough to protect your parental rights should they be challenged in court. Fortunately, there are steps you can take to secure your parental rights.

In some states, parental rights can be secured through a court order known as a “judgment of parentage,” in which the judge decrees the legal parentage of a child. Alternatively, some couples pursue second parent adoption, which secures nationwide legal parental rights for the adoptive parent. Still others establish a shared custody agreement, which establishes legal obligations for the non-legal parent agreeing to share custody of a child. The best solution for you depends on your particular situation and should be determined in consultation with an advisor who specializes in solutions for LGBTQ+ individuals.

Resolve old commitments

For some LGBTQ+ individuals, unions established before 2015 may be legally binding, and those unions may impact your estate planning even if the romantic relationship is over. Resolving any outstanding commitments will help secure your assets for you and your current family.

By the time the Supreme Court legalized same-sex marriage at the federal level in 2015, some states had already legalized same-sex marriage, while some states had legally recognized domestic partnerships or civil unions, creating confusing scenarios for some LGBTQ+ couples. For example, take a couple that was legally united in one state and subsequently moved to a state that did not legally recognize marriage, where they broke up. Because their new state did not recognize the marriage, it’s possible that they never legally dissolved the union — even though it remains legally binding.

Additionally, when the Supreme Court decision came down, some states automatically converted domestic partnerships and civil unions to legal marriages, meaning that some LGBTQ+ people may be married and not even know it. The inheritance implications of this situation may or may not be desired, and couples should address such issues in their estate plan.

Make a gender-inclusive plan

Gender indicators in legal documents can have an impact on their legality. If your partner or heirs change their name or gender markers and your will refers to them with outdated pronouns, your will is at risk for a legal challenge.

You can prevent these challenges by updating your estate plan to remove gendered pronouns and ensure that correct legal names are used throughout your legal documents. If you have unsupportive family members who might challenge your wishes, make sure to identify these individuals in your estate plan so they cannot serve as financial fiduciaries or guardians of your children. 

The importance of knowledgeable, empathetic advisors

While developing your estate plan, make sure your legal and financial advisors are attuned to your needs and keep current on the laws in your jurisdiction. You may wish to seek out professionals who specialize in LGBTQ+ estate planning, and who can advise you as needs change for you and your family.

Once you’ve established a working relationship with an advisor, revisit your estate plan periodically to ensure that your details are up to date, so that you and your family can rest easier.

 

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