Issuu on Google+

ESTATE PLANNING FOR THE LGBT COMMUNITY Mark O. Costley


Although societal biases and attitudes toward members of the LGBT community have certainly changed over the last few decades, the law has been much slower to adapt. If you are a member of the LGBT community then you likely already know this. FREE GLBT ESTATE PLANNING REPORT Gay & Lesbian Couples Face Special Challenges in Estate Planning

Despite the fact that same-sex marriage is now legal in a handful of states, most same-sex couples still face a number of practical and legal issues that heterosexual couples do not face. Estate planning for a same-sex couple can be more important than it is for a heterosexual couple because of the simple fact that the law typically does not afford a same-sex spouse with the same rights that it provides to an opposite sex spouse. The good news though is that through the creation of a carefully thought out estate plan you can protect yourself and provide for your same-sex spouse.

WHAT DOES THE LAW SAY ABOUT SAMESEX COUPLES?

In this report, you'll learn why the right to privacy and personal control over health care issues and distribution of assets are key reasons for gay and lesbian couples to consider a Living Trust as their estate planning vehicle of choice.

Walker Lambe Rhudy Costley & Gill, PLLC

Although state laws are slowly changing in some parts of the United States, the majority of states continue to view marriage as a union between two people of the opposite sex. As of March 2013, 37 states had either a constitution or statutory provision that specifically defines marriage as a union between a man and a woman. North Carolina is one of those states. The remaining states allow a legal marriage, a domestic partnership, or a civil union between couples of the same sex. Unfortunately, even couples who have entered into one of these legal unions may still encounter a host

www.organizeyourassets.com

2


of legal obstacles as a result of the federal Defense of Marriage Act, or DOMA, which was passed in 1996. DOMA defines marriage as a relationship between a man and a woman and it applies to all federal programs and benefits, including things like Social Security benefits and tax deductions for married couples. Because of DOMA, even couples who were legally married in a state that recognizes same-sex marriages need a comprehensive estate plan. NOTE – The U.S. Supreme Court recently heard arguments in a case challenging thhn e constitutionality of DOMA. A ruling is expected by the end of June.

PROTECTING YOURSELF – INCAPACITY PLANNING If a member of the GLBT community fails to properly plan, the result can be devastating to his or her partner and family.

One of most people’s biggest fears is becoming incapacitated. Whether as a result of an age related form of dementia, or a horrific car accident in the prime of life, the idea of being unable to make healthcare and financial decisions for yourself is likely not a pleasant one. For same-sex couples there is an added dimension to the natural fear of incapacity because the law does not recognize your spouse/partner’s authority and position. Absent an incapacity plan, your spouse/partner could be shut out and another family member appointed to make your healthcare decisions or control your finances. As a North Carolina resident, there are several estate planning documents that can solve this problem, including:  Advanced Directive for a Natural Death—this is a legally binding document that allows you to make

Walker Lambe Rhudy Costley & Gill, PLLC

www.organizeyourassets.com

3


A GLBT couple can avoid numerous problems through proper estate planning: A Living Trust can establish the client's domestic partner as the trustee, i.e. manager of the client's affairs (if he or she so desires) if the client becomes incapacitated through illness or accident. The Health Care Power of Attorney can also avoid the potential problems of the client not maintaining control over his or her health care decisions and the domestic partner not having access to his or her partner during a period of incapacitation. A proper estate plan will ensure the client's assets are distributed to whom he or she wants, when and how he or she desires. The Living Trust guarantees privacy, through avoidance of probate and its process of opening court records. This would be beneficial for any clients and their domestic partners who wish for their relationship to remain confidential.

Walker Lambe Rhudy Costley & Gill, PLLC

decisions to withhold or withdraw life-prolonging measures if they are ever warranted at a future point in time.  Healthcare Power of Attorney – also a legal document that allows you to appoint someone to make healthcare decisions for you if you are unable to do so at some point in time.  Revocable Trust – by creating a revocable trust you can transfer assets into the trust, appoint yourself trustee of the trust, and then appoint your spouse as successor trustee in the event of your incapacity. You may even be able to define what constitutes your own incapacity.  Joint Ownership – by titling assets jointly you may be able to provide immediate access and control to your spouse/partner if you become incapacitated.

PROTECTING YOUR CHILDREN Because North Carolina does not allow same-sex couples to adopt and also bans second parent adoptions by same-sex couples, same-sex parents must employ other strategies to protect the parent-child relationship. A good starting point is for each parent to appoint the other as guardian in their Last Will and Testament. Another strategy is to create a trust and appoint your partner as the trustee of the trust and the child as beneficiary. Assets for the child’s support can then be transferred into the trust, effectively giving your partner financial control over assets earmarked for your child.

www.organizeyourassets.com

4


PROVIDING FOR YOUR SPOUSE A GLBT couple can avoid numerous problems through proper estate planning: Proper estate planning assures that any surviving minor children are raised by the person designated in the plan. Finally, although there are no spousal benefits for GLBT couples (compared to those of heterosexual married couples) proper estate planning will ensure correct strategies are used to avoid penalties, extra taxation when possible, and the court and attorney costs of probate.

Providing financially for your spouse is likely an important estate planning goal. Until DOMA is overturned, modified, or rescinded, there is little that can be done about the numerous federal benefits that are available to opposite sex spouses upon the death of a spouse; however, there are steps you can take within your estate plan to ensure that your spouse/partner receives the assets you wish him or her to have when you die.  Last Will and Testament – direct gifts of cash, property, or personal items can be made in your Last Will and Testament.  Life Insurance – you can name your spouse/partner as the beneficiary of a life insurance policy.  Beneficiary Designations – accounts such as pensions, IRAs, and investment accounts typically (but not always) allow you to name a same-sex partner as the beneficiary on the account.  Pay on Death – financial accounts such as your bank account may give you the option to name someone as the “pay on death” beneficiary of the account. As the name implies, this means that all funds held in the account will pay out directly to the named beneficiary when you die.  Joint Title – real property can be titled as joint tenancy with rights of survivorship in North Carolina which will cause your interest in the

Walker Lambe Rhudy Costley & Gill, PLLC

www.organizeyourassets.com

5


About the Author With more than nineteen years experience in private practice, Mark Costley has helped hundreds of North Carolinians with estate planning, living trusts, financial law and probate, estate and trust administration. A partner with one of the largest and most vibrant estate planning practices in the Research Triangle area of North Carolina, Mark’s areas of practice are estate planning, trust and estate administration, planning for children and adults with special needs, business succession planning and business transactions, representation of non-profit organizations, family charitable and philanthropic counseling, civil dispute mediation, and business, estate and trust litigation. Mark’s work involves elements of teaching, strategic analysis and planning, negotiation, documentation, and assisting clients in executing their plans. Mark is devoted to providing clients with the best in estate planning, estate administration and financial services law. Mark is also a certified court mediator.

Walker Lambe Rhudy Costley & Gill, PLLC

property to pass directly to the other tenant in the event of your death. Because the law is ever-changing, it is impossible to predict what the future holds for members of the LGBT community. There are, however, things that you can do now to protect you, your children, and your partner in the event of your incapacity or death. Be sure to consult with an estate planning attorney about which strategies and tools will work best to achieve your goals. Human Rights Campaign Foundation, Life and estate Planning for Lesbian, Gay, Bisexual and Transgender Americans American Civil Liberties Union, Second Parent Adoption in North Carolina North Carolina Advanced Directive for a Natural Death North Carolina, Healthcare Power of Attorney National Conference of State Legislatures, Defining Marriage North Carolina Bar Association, Estate Planning for Gay, Lesbian, Bisexual and Transgender Clients

www.organizeyourassets.com

6


Estate Planning for the LGBT Community