At dinner with friends the other night our hosts and the boyfriend recounted the horror story of a same sex couple where one became very ill and ultimately died. Most of the couple’s assets were in the name of the deceased partner and the surviving partner lost almost everything, including his home and a business that he had helped build. In fact, he had to prove in court which assets he had purchased in his own right in order to have them not incorporated into the deceased partner's estate that went only to his blood relatives. These kinds of nightmares happen with all to frequent regularity. Meanwhile, they CAN be avoided through proper estate planning documents. I have set out below an article I put together on this topic for my LGBT clients (NOTE: While the article deals with Virginia law, the concepts are generally applicable in other states):*
ESSENTIAL LEGAL DOCUMENTS FOR LGBT COUPLES
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There are some things same-sex couples can and should do to provide for some of the legal protection automatically conferred on married couples. Unfortunately, far too many such couples fail to take the relatively simple steps to avoid the adverse and/or unexpected effects of current law.
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NECESSARY DOCUMENTS AND STEPS: There are some basic documents and steps that every unmarried couple and every same-sex couple should have prepared and duly signed. These include:
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Will - A will specifies how you wish your property to be distributed upon your death. In a will, you designate the person you wish to handle your estate -- your partner or another individual. Without one, your partner receives absolutely nothing. Pursuant to § 64.1-46 of the Virginia Code, anyone who is over the age of 18 years and not mentally incompetent may make a will and thereby dispose of any estate to which he shall be entitled, at his death, including any estate, right or interest to which the testator may be entitled at his death, notwithstanding he may become so entitled subsequently to the execution of the will. Inasmuch as neither § 64.1-46 or other provisions of the Virginia Code restrict permitted devisees to spouses or blood relatives, both unmarried heterosexual couples and same-sex couples may make wills leaving assets to their partners.
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Trust - A properly established and funded trust avoids publicly probating assets owned by the trust at the time of one’s death and is more difficult to challenge in court than a will. In addition, a trust can provide beneficiaries with creditor protection in certain circumstances. Properly structured, a trust can provide support for one’s surviving partner for the remainder of his or her life, with the remainder to pass to other relatives and designated beneficiaries, bypassing potential taxes associated with the surviving partner's estate. Chapter 4, Title 26 of the Virginia Code governing the appointment, qualification, resignation, removal of fiduciaries, including trustees, contains no provision restricting permitted trustees or trust beneficiaries to spouses or blood relatives. Therefore, both unmarried heterosexual couples and same-sex couples may create trusts naming their partners as beneficiaries in a manner that does not purport “to bestow the privileges or obligations of marriage.”
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Medical/Health Care Power of Attorney - A health care or medical power of attorney allows one’s partner regardless of gender to make medical decisions on your behalf in the event you are not able to do so due to incompetency or other incapacity. Properly drafted, a health care power of attorney can also ensure hospital visitation rights to the designated attorney-in-fact
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Advanced Medical Directive - § 54.1-2983 of the Virginia Code provides that any mentally competent adult may, at any time, make a written advance directive (i) authorizing the providing, withholding or withdrawal of life-prolonging procedures in the event such person should have a terminal condition, and (ii) appointing an agent to make health care decisions for the declarant under the circumstances stated in the advance directive if the declarant should be determined to be incapable of making an informed decision. Advance medical directives must be signed by the declarant in the presence of two subscribing witnesses who cannot be the spouse or blood relatives of the declarant.
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There is no statutory restriction that one’s agent must be a spouse or blood relative. Rather, §54.1-2982 of the Virginia Code provides that under any such advance medical directive, an agent means “an adult appointed by the declarant under an advance directive, executed or made in accordance with the provisions of § 54.1-2983, to make health care decisions for him. . ." Such authority includes visitation rights, provided the advance directive makes express provisions for visitation. Therefore, properly drafted and executed advanced medical directives by a same-sex couple should not be deemed to “bestow a privileges or obligations of marriage.”
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General/Business Power of Attorney - This form of power of attorney allows a member of either an unmarried couple or a same-sex couple to authorize their partner to handle their financial affairs in the event of disability or unavailability.
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Title on Deeds and Accounts - How title to property is held can effect both future ownership and tax liability. Joint tenancy with rights of survivorship, for example, will ensure that the surviving partner will have full ownership upon the death of the deceased partner and avoid ownership disputes with surviving blood relatives. However, it can create certain negative estate tax treatment depending on the size of one’s taxable estate. Historically, deeds creating a tenancy by the entirety have been reserved for husband and wife couples. In light of the Virginia Affirmation of Marriage Act cited above, such a deed conveying title to a same-sex couple even though validly married in another state such as Massachusetts would not be effective in Virginia.
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BENEFICIARY DESIGNATIONS: Most securities and retirement accounts provide for the designation of beneficiaries. These should be reviewed periodically to ensure that desired goals are achieved and also should include the designation of contingent beneficiaries to ensure the desired parties are named in the event of the death of the principal beneficiary.
*
LIFE INSURANCE: Properly utilized, life insurance can provide funding for payment of estate taxes, outstanding mortgages, charitable trusts, education of minors, and other functions.
*
NOTE: This article contains a general discussion of estate planning matters which vary greatly in asset structuring needs and potential tax liability based on the particular facts and circumstances of individuals and the nature of their assets. Therefore, it should not be relied upon as a substitute for individualized legal advice addressing one’s particular situation.
*
There are some things same-sex couples can and should do to provide for some of the legal protection automatically conferred on married couples. Unfortunately, far too many such couples fail to take the relatively simple steps to avoid the adverse and/or unexpected effects of current law.
*
NECESSARY DOCUMENTS AND STEPS: There are some basic documents and steps that every unmarried couple and every same-sex couple should have prepared and duly signed. These include:
*
Will - A will specifies how you wish your property to be distributed upon your death. In a will, you designate the person you wish to handle your estate -- your partner or another individual. Without one, your partner receives absolutely nothing. Pursuant to § 64.1-46 of the Virginia Code, anyone who is over the age of 18 years and not mentally incompetent may make a will and thereby dispose of any estate to which he shall be entitled, at his death, including any estate, right or interest to which the testator may be entitled at his death, notwithstanding he may become so entitled subsequently to the execution of the will. Inasmuch as neither § 64.1-46 or other provisions of the Virginia Code restrict permitted devisees to spouses or blood relatives, both unmarried heterosexual couples and same-sex couples may make wills leaving assets to their partners.
*
Trust - A properly established and funded trust avoids publicly probating assets owned by the trust at the time of one’s death and is more difficult to challenge in court than a will. In addition, a trust can provide beneficiaries with creditor protection in certain circumstances. Properly structured, a trust can provide support for one’s surviving partner for the remainder of his or her life, with the remainder to pass to other relatives and designated beneficiaries, bypassing potential taxes associated with the surviving partner's estate. Chapter 4, Title 26 of the Virginia Code governing the appointment, qualification, resignation, removal of fiduciaries, including trustees, contains no provision restricting permitted trustees or trust beneficiaries to spouses or blood relatives. Therefore, both unmarried heterosexual couples and same-sex couples may create trusts naming their partners as beneficiaries in a manner that does not purport “to bestow the privileges or obligations of marriage.”
*
Medical/Health Care Power of Attorney - A health care or medical power of attorney allows one’s partner regardless of gender to make medical decisions on your behalf in the event you are not able to do so due to incompetency or other incapacity. Properly drafted, a health care power of attorney can also ensure hospital visitation rights to the designated attorney-in-fact
*
Advanced Medical Directive - § 54.1-2983 of the Virginia Code provides that any mentally competent adult may, at any time, make a written advance directive (i) authorizing the providing, withholding or withdrawal of life-prolonging procedures in the event such person should have a terminal condition, and (ii) appointing an agent to make health care decisions for the declarant under the circumstances stated in the advance directive if the declarant should be determined to be incapable of making an informed decision. Advance medical directives must be signed by the declarant in the presence of two subscribing witnesses who cannot be the spouse or blood relatives of the declarant.
*
There is no statutory restriction that one’s agent must be a spouse or blood relative. Rather, §54.1-2982 of the Virginia Code provides that under any such advance medical directive, an agent means “an adult appointed by the declarant under an advance directive, executed or made in accordance with the provisions of § 54.1-2983, to make health care decisions for him. . ." Such authority includes visitation rights, provided the advance directive makes express provisions for visitation. Therefore, properly drafted and executed advanced medical directives by a same-sex couple should not be deemed to “bestow a privileges or obligations of marriage.”
*
General/Business Power of Attorney - This form of power of attorney allows a member of either an unmarried couple or a same-sex couple to authorize their partner to handle their financial affairs in the event of disability or unavailability.
*
Title on Deeds and Accounts - How title to property is held can effect both future ownership and tax liability. Joint tenancy with rights of survivorship, for example, will ensure that the surviving partner will have full ownership upon the death of the deceased partner and avoid ownership disputes with surviving blood relatives. However, it can create certain negative estate tax treatment depending on the size of one’s taxable estate. Historically, deeds creating a tenancy by the entirety have been reserved for husband and wife couples. In light of the Virginia Affirmation of Marriage Act cited above, such a deed conveying title to a same-sex couple even though validly married in another state such as Massachusetts would not be effective in Virginia.
*
BENEFICIARY DESIGNATIONS: Most securities and retirement accounts provide for the designation of beneficiaries. These should be reviewed periodically to ensure that desired goals are achieved and also should include the designation of contingent beneficiaries to ensure the desired parties are named in the event of the death of the principal beneficiary.
*
LIFE INSURANCE: Properly utilized, life insurance can provide funding for payment of estate taxes, outstanding mortgages, charitable trusts, education of minors, and other functions.
*
NOTE: This article contains a general discussion of estate planning matters which vary greatly in asset structuring needs and potential tax liability based on the particular facts and circumstances of individuals and the nature of their assets. Therefore, it should not be relied upon as a substitute for individualized legal advice addressing one’s particular situation.
2 comments:
There are so many legal tools which vary by state that it's always a good idea to consult an expert when planning your estate. We've been preparing to meet with our estate planner by reading a book called Die$mart. We never realized how complex the laws surrounding managing and transferring assets have become. There were several areas where I learned how vulnerable we were and how our wishes or assets might be treated differently than we had thought.
This is a prime example of why estate planning is essential, especially if the couple is not married. It is great that you have compiled a list specifically for LGBT clients.
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