Gay couples have unique concerns when creating an estate plan. This article introduces six specific estate planning issues that gay couples should consider and it also provides plenty of resources for further learning.
Read more about Estate Planning for Gay Couples.
A will is the heart of any estate plan. It is a simple, powerful, and relatively inexpensive document that you may be able to make yourself. With a will you can :
- determine who gets your property
- nominate a the guardian for your kids and their property, and
- name an executor.
You can also use your will to name a caretaker for a pet, explain how taxes should be paid, forgive debts, and more.
If you do not make a will, you will die intestate and your property will be distributed according to the intestate succession laws of your state. Dying intestate almost always has an undesirable effect. This is especially true for gay couples because intestate succession laws rely on the legal relationships of marriage and parentage – and will leave your partner and your partner’s kids with no right to your property. Learn more about Intestate Succession on Nolo.com.
You can make a simple will yourself if you find a quality will-making program like Quicken WillMaker Plus. If you want a more complicated will, see a lawyer for help.
Learn more about Wills on Nolo.com.
2. Probate Avoidance
Probate is the court process of wrapping up your estate. Probate can be a long and expensive process, and it is rarely a benefit to the estate. There are ways to avoid probate, and many estate plans focus on doing so.
Avoiding probate may be more complicated for gay couples because they cannot take advantage of laws that allow property to pass to spouses without probate.
You can avoid probate by using these estate planning tools:
(Click on them to learn more.)
Additionally, most states have simplified probate procedures for small estates. So if you don’t have much property, you may not need to plan for probate at all. Learn more about Probate Shortcuts in Your State.
3. Health Care Directives
Health care directives set out your wishes for health care, in case you cannot speak for yourself. There are two pieces to a health care directive:
- the living will or declaration, in which you state what kind of care you want or don’t want, and
- the power of attorney for health care, in which you name a person to make health care decisions for you.
Health care directives are a vital aspect of a same-sex couple’s estate plan because they give healthcare professional clear and legal instructions for providing care – without room for any speculation about the legality of the couple’s relationship.
Learn more about Health Care Directives on Nolo.com.
4. Financial Powers of Attorney
With a financial powers of attorney, you give another person power over your finances. You can make a limited power of attorney for a specific purpose or time, or you can make a durable power of attorney in which you name someone to take care of your finances in case you become incapacitated and can’t take care of them yourself.
If you anticipate incapacity, or just want to make sure that your partner is named to take care of your finances in case of emergency, consider making a durable power of attorney.
Learn more about Financial Powers of Attorney on Nolo.com.
Learn more about how Health Care Directives and Financial Powers of Attorney can work together to protect you and your partner.
5. Estate Taxes
Most people do not have to worry about estate taxes, but if you do, you won’t be able to use many of the tricks that married couples can use to avoid these taxes.
The Federal Estate Tax Exemption Is Very High
Only estates larger than $5.25 million will pay estate tax in 2013. So, if you die in 2013, and your estate is worth less than $5.25 million, you don’t need to worry about federal estate taxes.
One caveat: Find out whether your state has its own estate tax. Of the states that do, most have an exemption that is less than the federal exemption. So, your estate could end up owing state estate tax, even if it doesn’t owe federal estate tax. Read State Estate Taxes to learn about the estate tax in your state.
Planning to Reduce Estate Taxes
If you are worried about estate taxes, you and your partner will need to see a lawyer or tax professional to make a plan to reduce them.
Married opposite-sex couples can rely on the rule that allows property to pass to a married spouse tax-free. However, because the federal government does not recognize same-sex marriages, same-sex couples cannot take advantage of this law even if they are legally married.
However, you may still be able to plan to reduce estate taxes. For example, if you and your partner are leaving everything to each other and you’re worried that your combined estate may cause the surviving spouse to owe estate taxes, you can use a bypass trust to give the surviving spouse access to the first spouse’s property, without having that property included in his or her taxable estate. Learn more about bypass trusts and estate taxes in the Estate Tax section of Nolo.com.
6. Final Arrangements
As part of your estate plan, you and your partner could also consider making a final arrangements document. In this document you lay out your wishes and plans for your final arrangements. With a final arrangements document, you can leave details about:
- burial or cremation
- caskets and urns
- headstones or burial markers
- ceremonies, and
- paying for final arrangements.
While this document is not a legally binding document, it can come as great relief to those who must take care of these details after you die. Knowing what you wanted can calm concerns and put to rest any questions about your final wishes. This may be of particular help to your partner if you anticipate that other people in your life may have strong opinions about how to lay you to rest.
A final arrangements document is one of many documents available with Quicken WillMaker Plus. This program – with which you can also make a will, healthcare direct and financial power of attorney -- walks you through all of the issues listed above, allowing you to leave as much or as little detail as you like about your final wishes
More Legal Issues for Gay Couples
Learn more about how to Protect Your Relationship: Taxes, Estate Planning & More.
Learn more about Tax Issues for Same-Sex Couples.
Learn more about legal issues affecting same-sex couples in the LGBT Law section on Nolo.com.
See a Lawyer for Help
Many laws affecting same-sex couples are state specific, so it’s a good idea to see a local lawyer to help you with your estate plan. Find an attorney who specializes in legal issues for same sex couples. To find a lawyer, ask friends for references or try searching Nolo’s Lawyer Directory.