LGBTQ+ Estate Planning

Updated: Oct 12

The idea of planning after you are gone is daunting, but proper estate planning is vital for anyone who wishes to protect their assets and loved ones. It becomes more challenging for LGBTQ+ families, notably in certain states and countries where the law is not on your side.

The not yet global legal recognition of same-sex marriages, opens up a multitude of previously unattainable tools and tax savings that come along with a marriage. Yet, same-sex couples still may encounter situations that require extra or special planning, such as adoption by non-biological parents or navigating complicated dynamics with family members who may not accept them leading up to sabotage by un-supportive family members, such as:

  • Wills being contested

  • Custody battles over non-biological children

  • Interference with a spouse’s ability to make medical and financial decisions for their partner

While there is not necessarily a need to draft specific estate planning documents, same-sex couples should make a pointed effort to review pre-existing estate planning documents and include language (e.g. wife/husband/spouse) consistent with current laws to help protect loved ones and ensure your wishes are carried out after you are gone.

1. Make Sure Your Assets Transition According to Your Wishes
2. Go Beyond a Will for End of Life Care
Power of attorney
Medical power of attorney
Healthcare directive
3. Take Advantage of the Tax Regime
4. Close the Loop for Your Children
5. Consider Real Estate Ownership
Joint Tenants
Tenants in Common
6. Tie-Up Loose Ends from Before Marriage Equality

Keep in mind the following estate planning considerations:

1. Make Sure Your Assets Transition According to Your Wishes

Wills are particularly important for anyone who is not married but in a serious relationship. If you are in a ‘partnership’ or other serious romantic relationship and you die without a Will (the legal term for this is ‘to die intestate’) then intestacy laws of the state or country where you had your last habitual residence will decide who gets your assets. These rules vary greatly across jurisdictions which means your assets could be divided among a number of traditional heirs including even aunts and uncles you meet once in a blue moon. Domestic partners are rarely envisaged in intestacy laws, hence likely to be left out of your inheritance. Therefore, if you want to choose what happens to your assets when you pass, a registered Will is the best way.

Keep your Will up-to-date, as well as the designation of certain direct beneficiaries. For many people, retirement accounts and life insurance policies which have a direct beneficiary, are their largest assets, and yet beneficiary designations supersede whatever is written in their Will. If you had named a person who is now estranged as a direct beneficiary and forgot to change it, that person will collect that asset, regardless of what is laid down in your Will.

If you believe that your family is going to contest your Will anyways, you may consider creating a trust which offers superior asset protection.

Despite the benefits of establishing a trust which can be expensive and not a viable option, then consider adding a “no contest” clause or particular language into your Will that explains why you are leaving your estate to your spouse instead of other family members, thereby giving them less room to contest your Will during probate.

You should also keep a paper trail of your previous estate planning documents. If your Will is ever contested, it becomes more difficult to prove fraud or undue influence if several documents demonstrate consistency of your wishes regarding your spouse and their inheritance.

2. Go Beyond a Will for End of Life Care

It does not stop there. Same-sex spouses tend to be challenged more often than not when they need to make medical and financial decisions for partners who are incapacitated or unable to communicate. This is why same-sex couples especially need to document their wishes, and notably by putting in place:

  • A power of attorney — designates a person to handle your financial matters if you become too ill or incapacitated. There are different kinds of powers of attorney and the rules and requirements vary.

  • A medical power of attorney — designates a person to make medical decisions on your behalf if you are too ill or incapacitated. This is particularly important for same-sex couples who are unmarried or in domestic partnerships to ensure that the individual you want to make your decisions is enabled to do so.

  • A healthcare directive — designates the type of healthcare you would like to receive at the end of your life in the event you are too ill or incapacitated to speak for yourself.

3. Take Advantage of the Tax Regime

In certain states and countries, same-sex couples enjoy the same estate/inheritance tax regime as heterosexual couples. Making a Will should no longer be perceived as triggering unfavorable tax treatment.

4. Close the Loop for Your Children

Same-sex parents have a unique set of estate planning concerns when it comes to children, especially when only one partner is the biological parent. A child, either born or adopted into a same-sex union, needs to be specifically identified throughout the estate planning documents.

Thus, you should designate a guardian for minor children in your Will. Otherwise, the court system will make a wild guess as to what would be in the best interest of the child, and possibly not choose your partner or spouse as the preferred candidate.

In order to prevent opening the door to custody battles, the non-biological parent should strongly consider adopting that child. This is particularly true if the child was born before the couple got married. Adoption establishes a legal relationship and avoids having to battle for custody if anything happens to the biological parent.

Adoption also plays an important role in the passage of assets. Typically, when parents die their assets are passed on to their children.

5. Consider Real Estate Ownership

Same-sex couples should also review real estate documents, especially for property purchased before marriage equality, to make sure that ownership is documented according to the couple’s wishes. Typically, real estate is owned as ‘joint tenants’ or ‘tenants in common’.

  • Joint Tenants means that both individuals are owners of the whole property. If one passes away, the other will automatically gain sole ownership.

  • Tenants in Common means that both individuals own a share in the property. If one passes away, their share will be distributed in accordance with their Will or intestacy laws.

Having said that, the state or country you live in may assume how assets are titled if not specified otherwise. For example, in states and countries where community property is assumed for assets acquired after marriage, the couple may want to convert assets acquired separately before marriage to community property, in order to receive a step-up in basis upon the death of the surviving spouse.

However, this means that your spouse has control over 50% of the property, and you will be unable to leave 100% of the property to a different person, such as a child.

6. Tie-Up Loose Ends from Before Marriage Equality

Estate planning challenges remain for many LGBTQ+ individuals who entered into legal unions before marriage was even an option. The patchwork of prior laws has had some unintended consequences for estate planning.

For example, some same-sex couples tied the knot in states or countries that recognized their marriages, then moved to places that did not recognize those marriages. Thinking their nuptials “did not count anyway”, they may have split up but never legally dissolved their marriages.

On top of that, some states or countries have automatically converted registered domestic partnerships or civil unions into legal marriages. That means people are now legally married and they may not even know it, which opens the door to future claims against their estate.

In order to protect their estate and their interests, LGBTQ+ individuals must resolve the tangled web of domestic partnerships, civil unions, and other legal arrangements they may have created with prior partners from before marriage was made possible.

Writing your Will is the very first step, and it’s an important one. But that’s not enough. In the digital age, the next step is to store your Will online. Otherwise, what happens if your person of confidence is not able to find your Will in a timely manner? liteWill is the only Will registration platform that is available globally and that provides the option to store your Will online. ‘A Will that is not online is like a Will that does not exist’.

This portion of the website is for information only. The statements and opinions are the expression of their author, not of liteWill, and have not been evaluated for accuracy, completeness or changes in the law. Information contained in this article is not a substitute for tax or legal advice.

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