Estate Planning for Same-Sex Couples
The dominoes are falling and same-sex marriages are only a few court cases away from becoming reality nationwide. Currently, marriage equality is a reality in 36 states, and the Supreme Court is set to rule on the validity of same-sex marriage licenses sometime this term. By this summer, same-sex couples could be free to marry anywhere. Or they may not. No one knows.
So, what does all of this mean with regard to your family's estate planning? It means everything is really complicated, but there is hope that things will become easier sometime soon. Or maybe not.
In those states that have marriage equality, same-sex couples will be treated like every other legally married couple, which means they'll be entitled to the same benefits as other married couples. They already are entitled to the same tax benefits, at least at the federal level, but won't apply state-level estate taxes. Also, the rules only apply to those who have legal marriage licenses. Those in domestic partnerships or civil unions will not benefit from the changes.
The best bet for all same-sex couples is to be cautious. Regardless of how the Supreme Court rules later this term, some states will attempt to defy them, or which do something drastic to avoid having to follow the ruling at all. Avoiding federal taxes is a lot easier, but everything else could be a minefield right now, and could continue to be so for a while. The best strategy is to make sure you have all of the necessary estate planning documents in place, including:
Will
A will is essential if you live in a state that has resisted marriage equality until now, or if there is a possibility you might move to one at some point, or if live in a marriage equality state and you don't want 100% of everything to go to your spouse. In a state without marriage equality, your spouse will get nothing without a will, even if you just moved there days before you die. You should also have a will if you have children, to set up guardianship or another non-traditional relationship you and your spouse may prefer.
A Domestic Partnership Agreement, or DPA
This is closely related to a prenuptial agreement, which is commonly used by heterosexual couples as a crucial part of their estate plan, especially if the current marriage is not the first for either spouse or both and they have children from previous marriages. This type of contract spells out exactly how you and your spouse will share income, expenses and property, and it can be used to explain which property is held separately and which is held jointly. Not only is this useful for planning your estate, it can also be very useful should the relationship end. Same-sex couples may benefit from a prenuptial or post-nuptial agreement even if they live in a marriage-equality state, so this should be a discussion you have with your estate planning lawyer.
Durable Power of Attorney
This document is necessary because it allows you to designate your partner to manage your financial affairs should you become incapacitated. It is possible to download this form online, but if you are in a same-sex relationship, it would probably be better to have a lawyer draft one that applies to your specific circumstances.
Health Care Directives
These should include a living will, a health care power of attorney (which is different from the ore general POA noted above) and a HIPAA Authorization. These documents are necessary to allow your partner or spouse to honor your wishes regarding your medical care. Even those same-sex couples who are legally married should consider these documents as part of their estate plan, to make sure there are no questions when the time comes.
The HIPAA (The Health Insurance Portability and Accountability Act) authorization allows you to give medical providers permission to discuss your condition and prognosis with the person you designate, presumably your partner. Without specific authorization, doctors can speak only with “immediate family.” If you happen to be in a state or jurisdiction that questions your right to be married, or you haven't been married yet, your partner will likely not be considered “immediate family.”
No matter how he Supreme Court rules later this year, it's likely we'll continue to have a multi-layered system of legal protections for a while. That makes it very important for same-sex couples to speak to an estate planning lawyer and make sure everything is taken care of, in a way that protects you and your loved one. Even if you were married, live and work in a marriage equality state, what will happen if you are stricken in a state that is not?
Of course, if you're reading this, you probably live in Georgia, which means you may have to wait a while for everything to be settled. Come into our offices and let us help you today.
