Partner Planning: Estate Planning for Same Sex Couples

The laws generally do not recognize the same rights and privileges for same-sex couples in the areas of estates and trusts and since gay or lesbian couples lack the same concrete tax, inheritance and employment benefits that marriage bestows, these benefits must be created through the use of estate planning documents and contracts.

What is Intestacy and how will it affect my partner and I?

Under the laws of intestacy, the estate of a person who dies without any trust or will passes (after lengthy and costly probate proceedings) to biological relatives under the traditional family model.

There is one large problem with intestacy. The first and most important problem is that state intestacy laws discriminate against same-sex couples in that gay and lesbian relationships are generally considered invalid for purposes of distributing the estate of a deceased partner who dies without a will. Generally, under intestacy laws, a surviving partner will be left with nothing upon the death of a partner. So, it is inadvisable to rely on intestacy laws in place of estate planning. 

So how to provide for Loved Ones?

In order to ensure that certain property will actually be received by your partner or your friends, you must use a will, joint tenancy or a living trust. As explained before, because of intestacy laws, it is unwise to assume that because you are registered domestic partners, that will be enough proof of your intent, and that therefore your partner will be able to inherit your assets. You must have an estate plan other than intestacy.

The limitations of a Will?

A will is a document in which you identify to whom your property shall be given after you die. Through a will, you can leave your property to anyone you choose, in whatever proportions you choose, including leaving everything to your partner. If you have minor children, you can name a guardian for them in the will.

There are two major drawbacks to using a simple will as your primary estate planning device. First, a will is subject to the costly and time consuming issue of probate. Secondly, a will can, and frequently is, contested by the family of the decedent, especially if they have not come to terms with the decedent's choices during life. In addition, a will is public. Anyone can go to the courthouse and see your will after you die.

How about Joint Tenancy Ownership?

Drawbacks of Joint Tenancy

Owning assets in joint tenancy can also be a useful way to transfer property to your partner. When one joint tenant dies, the remaining joint tenants automatically own the entire asset without probate. For example, if you own a house in joint tenancy with your partner, when you die your partner will own the entire house.

However, you should keep in mind that joint tenancy does not eliminate probate, but only delays it.  This is because although the jointly held property passes to the surviving joint tenant without probate, the property is ultimately subject to probate upon the death of the survivor.

Another drawback few people consider when placing property in joint tenancy is the lack of control over the property?s ultimate disposition after the death of your partner ? the surviving joint tenant. Because the property is entirely owned by the remaining joint tenant, you have no say or control over what happens with the property after the death of the surviving joint tenant. The surviving joint tenant may dispose of the property, gift it or bequeath it to whomever he or she chooses. Alternatively, although most clients wish that their property be available for their partner after they die, they would prefer that after the death of the partner whatever is left of the property should go to their family or other heirs.

What you should do to properly plan?

1. Avoid Probate With a Revocable Living Trust. 

A living trust is a good way to avoid the expense and delay of probate while still ensuring the transfer of your assets to your partner and/or friends after death. In the living trust document, you name the persons who shall receive your assets ("beneficiaries") and you appoint someone who will apportion the trust assets after you die ("trustee"). After signing the living trust document, you continue to own and fully control all of your assets.

A living trust permits the smooth, inexpensive transfer of assets after death, without the court-supervised probate process. It makes it easier for your partner and for your family. In addition, a living trust is much less open to challenge than a will. Courts are less likely to overturn it since you put the living trust into place and lived with it during your lifetime. In addition, a living trust is private. Even after you die, no one except the beneficiary has the right to know how you allocated your assets.

2. Plan for Incapacity with a Durable Power of Attorney and an Advance Health Care Directive.

Through a document called a Durable Power of Attorney, you can appoint your partner and/or friend to act as your agent, with authority to make certain decisions for you. The document goes into effect only if you become legally incapacitated, which must be certified in writing by your doctor. Then, your agent will step in and perform the actions which you have outlined in the document.

If you do not prepare and sign a Durable Power of Attorney, someone will have to petition in court to be appointed as your agent. This can be expensive, time-consuming, and distressing to all involved, especially if there is a conflict between your partner and a family member.

There is another instrument similar to the Durable Power of Attorney, called the Advance Health Care Directive, in which you appoint an agent to make health care decisions for you if you become incapacitated. It is prudent to execute a directive to complement and clarify your rights.  Hospitals are often unfamiliar to the rights of domestic partners but routinely encounter and honor advance directives. 

Please contact our office at (410) 385-5397 for more information on Partner Planning.