Estate Planning for LGBT Couples   

Estate planning is vital for all individuals, but especially gay couples who face unique estate planning concerns. It is important for LGBT couples to work with a Phoenix attorney knowledgeable about the potential pitfalls that couples can run into while estate planning.

Below are four steps that gay couples should consider taking when creating an estate plan in Phoenix.

1. Draft a Will

A will is an essential part of any person’s estate plan—gay or straight. It determines who will inherit your assets and designates a guardian for minor children. If you die without a will (“intestate”), Arizona state law determines what will happen to your property. This can be problematic for same-sex couples. If you are unmarried, your partner will be disinherited, and your property will be left to your children, parents, siblings, or other heirs, depending on the circumstances. It is not uncommon for gay individuals to have strained relationships with their parents or other family members who do not accept them. If you do not take steps to create an estate plan, your property could end up in the hands of a family member who has rejected you.

2. Create a Trust

In addition to a will, gay couples should consider adding trust to their estate plan. A trust is a fiduciary arrangement that allows a third party to hold assets on behalf of a beneficiary or beneficiaries. There are various types of trusts that you can discuss with your attorney.

Trusts avoid probate, saving time and expense. Avoiding probate can be especially beneficial for gay individuals with complicated family relationships. Unlike a will, there is no process for interested parties to challenge a trust. This benefits individuals who have a family member that does not recognize the validity of their relationship. In addition to avoiding probate, trusts can provide tax benefits and help protect your assets from creditors.

3. Plan for Incapacitation

One area of estate planning that is often overlooked is planning for incapacitation. Some of the documents that gay couples should consider including in their estate plan include a:

• Living Will (“Advanced Directive”) – leaves instructions for end-of-life care in the event you are unable to communicate for yourself.
• Healthcare Power of Attorney – names an individual to make healthcare decisions on your behalf if you become incapacitated.
• Financial Power of Attorney – designates another individual to handle financial affairs on your behalf, such as paying bills or selling real estate.

Even more so than heterosexual couples, gay couples should ensure that these tools are included in their estate plans. Unfortunately, same-sex couples tend to be challenged more often than heterosexual couples when they need to make medical or financial decisions for their incapacitated partners. These documents provide clear instructions to healthcare and financial institutions and do not leave room for speculation about your relationship. Without this protection, family members could attempt to interfere with your partner’s ability to make medical and financial decisions on your behalf.

4. Plan for Your Children

Same-sex couples with children have unique estate planning concerns, especially when only one partner is the child’s biological parent, and the child was born before the couple married. Without a comprehensive estate plan, there is the potential for a custody battle over the non-biological child in the event of the biological parent’s death or incapacity. Additionally, you could accidentally disinherit the child. Gay couples should seriously consider legal adoption to avoid these pitfalls.

5. Update Beneficiary Designations

Some assets, like retirement accounts and life insurance, avoid probate and pass directly to named beneficiaries. It is critical to keep your beneficiary designations up to date because these designations supersede your will, and these accounts are often people’s largest assets. Not reviewing and updating beneficiary designations is one of the most common and costly estate planning mistakes.

6. Take Advantage of Unlimited Marital Exemption

After the U.S. Supreme Court legalized same-sex marriage, gay married couples can take advantage of the unlimited marital deduction for federal estate and gift taxes. This means that gay and lesbian partners can, in most cases, leave an unlimited amount of assets to their spouses without triggering federal estate tax. If you drafted your estate plan before this change, you may need to update your plan.

Phoenix Attorney Serving the LGBT Community

Gay couples should consult with an experienced Phoenix estate planning attorney who will create a plan to best fit their goals. Nicole Pavlik Law Firm helps the residents of Phoenix, Arizona with their estate planning needs. Call Nicole Pavlik Law Firm today at (602) 635-6176.