Estate planning may be a difficult subject for many individuals to think about. It forces individuals to consider issues that will occur both while they are alive and after they have passed away.
It is very important to ensure that an individual’s assets are correctly managed and that the next generation of their family will receive their inheritance without any issues. An individual’s estate includes all of the property they own, such as:
- Personal items;
- Bank accounts;
- Real estate;
- Stocks and securities; and
- Other assets as designated by the state where the decedent, or individual who passed away, lived.
A cohesive estate plan includes instructions regarding how an individual wants their property and assets to be managed and distributed when they pass away. Although many individuals typically associate estate planning with the elderly or wealthy individuals, almost everyone can benefit from creating a comprehensive estate plan.
A comprehensive estate plan may reduce an individual’s loved one’s tax obligations as well as the need to be involved in probate court proceedings. If an individual does not create and establish an estate plan for themselves, their estate will be distributed according to their state’s intestate succession laws.
These laws typically vary by state and will often result in property distribution that the decedent would not have wanted. There are numerous factors to consider when establishing an estate plan, including, but not limited to:
- The state’s specific estate laws;
- The individual’s life stage, as well as their family stage;
- Their financial assets; and
- Their long-term goals.
Estate planning can be especially important for same-sex couples, as the rules and laws that apply to these relationships are still evolving. Same-sex marriages are legally recognized marriages between two individuals who identify as the same sex as each other.
Same-sex marriage is currently legal in all fifty states in the United States and in the District of Columbia. Additionally, if same-sex married couples move states, their marriage will be recognized.
What Are the Important Aspects of Estate Planning?
Estate planning typically includes wills and trusts. Although solid estate plans typically include wills and trusts, estate plans may also address numerous other issues, which may include, but are not limited to:
- How the individual wants to receive medical treatment in the even that they become incapacitated and cannot speak for themselves;
- Whether or not they want to be an organ donor;
- Who is authorized to make legal and financial decisions on their behalf, should they become incapacitated;
- Who is authorized to care for their minor children should they become incapacitated, or when they die;
- Who is authorized to take over their business interests; and
- Their preferred funeral arrangements in addition to any information regarding previously made plans, such as a purchased burial plot or a prepaid funeral service.
Wills, trusts, powers of attorney, and other estate planning documents all work together to help protect an individual’s assets in addition to distributing them according to the individual’s wishes. Although each estate plan is based on the individual’s specific estates, examples of the general elements of an estate plan include:
- Their family and stakeholders understand their wishes, as well as any recent changes to their estate plan, in order to help minimize any legal disputes;
- Their estate plan clearly states their wishes and avoids vague language which may cause unnecessary disputes;
- The individual has a valid will which transfers their property to their named beneficiaries, and names a suitable legal guardian for their minor children;
- The individual has health care directives that cover their end-of-life medical treatment and other medical decisions; and
- They have a financial power of attorney so that if they become incapacitated, a trusted family member or friend will make important legal and financial decisions on their behalf.
Are There Any Tax Considerations for Estate Planning?
Yes, there are many tax considerations for same-sex couples, just as other couples, to consider when estate planning. The majority of states have estate and gift tax laws for assets that exceed certain amounts.
An individual should make their lawyer aware of each asset and liability they have in their name. It is also important to disclose whether there are joint banking accounts with their spouse.
What will be included in an individual’s estate will depend on the owner of the property. For example, whether the individual owns their home or if it is mortgaged.
The ownership status of the home will make a difference if an individual plans to leave it to a beneficiary. Other issues may also be considered, such as whether the individual has credit card debt, medical expenses, or owes money to the IRS.
This is because paying off medical debts as well as state or federal tax debts will take precedence, with very few spousal exceptions. This may also apply to other debts.
For a comprehensive understanding of the tax implications of an individual’s estate plan, they should consult with an attorney.
What About Protecting Children and Dependents?
In order to create an estate plan, an individual’s lawyer will need information about their family tree. This is because, even if an individual wants to exclude someone from their will, if there is something missing within the will, the state laws will take over to fill the gap.
Typically, children are not financially protected as spouses are, so an individual will need to be specific. This includes how many children they have, their ages, and if there are any stepchildren the individual wants treated as biological children with respect to estate distribution.
In addition, an individual should include who they want to care for their children should something happen to both parents. It is important to note that these questions do not have to be restricted to family members, as an individual may want to leave part of their estate to an individual who is related by blood.
Are There Any Legal Protections for Same-Sex Couples Estate Plans?
Yes, same-sex couples may be provided legal protections, including estate plan issues, such as:
- Power of attorney and medical power of attorney. These documents provide the right to make emergency medical decisions on a spouse’s behalf if they become incapacitated;
- These documents also provide the right to:
- enter into contracts;
- negotiate; and
- settle matters as if the individual were their spouse;
- Spousal testimonial privilege. If a spouse is called to testify against their spouse in court, they may be able to invoke marital privilege in order to avoid testifying against their spouse without being held in contempt of court;
- Worker’s compensation rights; and
- Inheritance rights.
It is important to note that this is not a complete list of benefits, as there may be others. It is also important to note that, although there has been progress for same-sex married couples related to adoption and child custody issues, there may still be a lack of legal protections for same-sex married parents who are raising or adopting children.
For example, in many states, there is not a presumption of parentage for same-sex married couples. This is because the parentage presumption is based on the assumption that both a woman and a man are the biological parents of any children that were conceived during their marriage.
In certain states, such as Mississippi, joint adoption by a same-sex couple is prohibited. In other states, a state-licensed, faith-based adoption agency is permitted to legally discriminate based on a couple’s sexual orientation.
Should I Consult with an Attorney?
If you are a same-sex couple who is considering creating an estate plan, it is essential to consult with a local lawyer. Due to the facts that the laws related to same-sex marriage are still evolving and that estate planning is contingent upon your state laws, working with a family lawyer is important to ensure that your estate plan is legally valid and follows the most up-to-date laws.
Your attorney can help you determine which estate planning tools best fit your needs, help organize your estate, and answer any other questions you may have. Having an attorney create your estate plan will help ensure that your loved ones receive your property according to your wishes.
