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3 Estate Planning Tips for Same-Sex Couples

A proper estate plan will help those left navigate the disposition of assets and the probate court system, especially for unmarried couples and some married same-sex couples.

By Ryne Vickery, CFP

If you’ve lost a friend or family member, and played a role in settling their affairs, you’re likely aware of the importance of having a proper estate plan in place. The lack of proper planning can cause a huge headache for loved ones left to navigate the disposition of assets and, likely, the probate court system. If this is true for heterosexual couples, then it is even more important for same-sex couples to have matters in hand due to the specific challenges that members of the LGBTQ community often face.

As a Wealth Advisor with Buckingham Strategic Wealth, Ryne Vickery, CFP®, works with his advisory team to develop comprehensive financial life plans for professionals, retirees and near-retirees, and same-sex couples who want to align their money with their goals and values.

Ryne Vickery, CFP

While it’s never fun to plan for your demise, unmarried couples in a serious relationship especially should plan for the unknown. Though the legalization of same-sex marriage leveled the playing field in a lot of areas, it is not a 100% safeguard when it comes to estate planning. Hostile family members can contest wills, interject in medical or financial decisions, or even wage a custody battle over children who may not be the biological offspring of the surviving parent.

Let’s explore three important estate planning areas that all same-sex couples should be sure to keep dusted, not busted.

Who Inherits Your Assets?

If one partner in an unmarried, serious relationship passes away without a will, the deceased’s assets will go directly to their family, which may leave the other partner with nothing. Without a will, your state essentially creates a will for you upon your passing through a process called intestacy. State intestacy laws rarely include domestic partners, meaning your assets may go to people that you do not intend to receive them.

Besides being simple to set up, a will doesn’t have to be too specific and allows you to name a guardian for your children. However, wills can be contested in court by anyone who thinks they have a legal right to your assets. To eliminate almost all concern about probate or a contestation from hostile family members, you should also consider establishing a trust. While more expensive than a will, a trust has many advantages including (but not limited to):

Avoiding probate – Because probate is a public process, establishing a trust will keep your estate private. A trust eliminates the potentially expensive costs of probate and can expedite the distribution of assets to beneficiaries.

Flexibility – A will only goes into effect after you’ve passed away. A revocable living trust, however, is effective immediately, and you remain in full control of it throughout your life. A trust also gives you more control of your assets after you’ve passed away by allowing you to specify precise intentions that your successor trustee must execute.

One important thing to note is that establishing a trust doesn’t solve all your problems. You must fund the trust by titling your specific assets and accounts in the trust’s name in order to receive its benefits. Items that are not in the name of the trust will likely go to probate.

Incapacitation and End-of-Life Care

Wills and trusts are vital to a well-rounded estate plan, but there are other equally important documents to consider. If your partner or spouse is incapacitated or approaching their final days, the surviving same-sex partner or spouse may be questioned about the validity of their role. For that reason, same-sex couples should document their wishes through the following:

Healthcare power of attorney (proxy) – In the event of incapacitation, the healthcare power of attorney allows you to designate someone to make healthcare decisions on your behalf. This is important because it allows you to specify what treatments and care you do or do not want while you’re in an incapacitated state.

Healthcare directive – A more specific version of the healthcare power of attorney, the healthcare directive allows you to designate your wishes for end-of-life care or any potential lifesaving treatments.

Durable financial power of attorney – This power of attorney varies by state, but it allows you to elect someone to handle your financial affairs in the event of your incapacitation.

Creating these documents while you are healthy can make the process a little less emotional than it might be otherwise. Additionally, you should review these documents every so often to be sure the people appointed to take care of you are still the ones you desire to do so.

Beneficiary Checkup

It is imperative that each partner keep all their beneficiary designations up to date. An incorrect or outdated beneficiary designation could lead to an inadvertent, yet costly, mistake in directing your estate. Imagine having a large life insurance policy or sizable retirement plan and leaving your estranged ex-spouse as the 100% primary beneficiary. This actually happens! Here are a few tips to keep things tidy:

Don’t forget to name a beneficiary – Accounts with no beneficiary may be subject to the potentially costly and lengthy probate process. In addition, be specific. There are many people out there who have the same name. So, be more specific by adding a Social Security number or date of birth to the beneficiary designation.

Review all account beneficiaries on an annual basis – Be sure to check all your accounts, including life insurance, IRAs, 401(k)s, annuities, mutual funds, etc.

Transfer on death – While your life insurance and retirement accounts should have a clear beneficiary designation form, other accounts may not. Bank accounts and investment brokerage accounts likely have a transfer-on-death designation, which will help your beneficiaries avoid the probate process.

These are some of the steps to ensure you have a proper estate plan in place. After implementing these suggestions, you and your loved ones will certainly rest easier knowing your affairs are in order should the worst happen. That peace of mind will be something you can all take comfort in now and into the future.

About the author: Ryne Vickery, CFP®

As a Wealth Advisor with Buckingham Strategic Wealth, Ryne Vickery, CFP®, works with his advisory team to develop comprehensive financial life plans for professionals, retirees and near-retirees, and same-sex couples who want to align their money with their goals and values.

Important Disclosure: The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. IRN-21-2142


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