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Most people in committed relationships want to protect their partners. An estate plan does just that.
No one likes to think about a time when they might be unable to make decisions for themselves. And we really don't like to think about death. And yet, death and dying are a part of life. That's why estate planning matters. It gives us the opportunity to call some of the shots while we are still able.
Brian Thompson (pictured above), owner of Brian Thompson Financial, lives with his husband of nearly five years in Chicago. Although the tax attorney and financial planner works with LGBTQ couples through all stages of life, today he focuses primarily on LGBTQ entrepreneurs, helping their businesses thrive. Thompson offers hard-earned advice on a number of financial matters both in person and in his blog, including the importance of estate planning.
"It is super important to take care of estate planning because you need to figure out who is going to make decisions for you if you become incapacitated," Thompson said. He points out that financial and legal planning are even more critical for unmarried couples, especially if there are children involved.
There is no one-size-fits-all estate plan, but here are some of the documents that can help.
A will states who will inherit your money and possessions, who will act as guardian for any children, and names an executor to carry out your wishes when you die. A will can also forgive debts, leave special "one-off" gifts, and designate someone to care for your pets.
If you die without a will in place, it's called intestate, and your estate will be distributed according to state laws. Intestate laws frequently cause problems for unmarried same-sex couples. One partner may have no rights to their partner's assets or access to their bank account -- even if they worked together to build them.
Many prefer to have their wills prepared by an experienced estate attorney because it is such an important document. However, if properly executed, a do-it-yourself will can be equally valid. You can choose an online service that provides only a template, or one that walks you through each step of the process. Make sure you understand what the rules are in your state, how to get it signed and witnessed and whether you need to get it notarized. Keep a copy of the will somewhere it can be found and consider giving a copy to someone you trust.
On that note, Thompson recommends that couples put together a "What My Family Should Know" book that includes internet passwords and an outline of where important belongings and documents can be found.
Thompson considers a power of attorney (POA) as the "important" part of estate planning because it allows you to name someone you trust to make decisions for you if you are unable to make those decisions yourself. You can have more than one power of attorney for different aspects, for example, you may want one person to make medical decisions and another to make financial ones.
POAs are included in a comprehensive estate plan prepared by an attorney but are relatively simple to prepare on your own. However, it is important to educate yourself on the laws in your state regarding whether you need to use witnesses, a notary, or witnesses and a notary.
Give a copy to the person you choose to be your POA. In addition, there should be a copy of your medical POA filed in your doctor's office and a copy of your financial POA filed with your bank or credit union.
Living wills are known in some states as a "Directive to Physicians" or "Healthcare Directive." No matter the name, this document allows you to set out your wishes in case you ever become incapacitated. It can protect your loved ones from having to guess at your wishes and in some cases, avoid court battles. For example, how long would you want to be kept alive if you fell into a persistent vegetative state?
If your attorney creates a comprehensive estate plan for you, a living will be included. If you would prefer to prepare one yourself, it's not difficult to do. Templates are available online and, depending on the laws of your state, become legal once they are witnessed and/or notarized. Give a copy to your doctor and the person you named as your medical POA, and, as with your will, keep it somewhere people can find it at home.
A living trust is a financial agreement that creates a third-party to hold assets on behalf of beneficiaries. It is primarily set up to minimize estate taxes and protect assets. According to Thompson, many couples can do without a living trust, and those who do need one should work with an attorney who specializes in estate planning.
Legally, you can create a trust yourself, but it is not as easy as purchasing a trust kit and filling it out. You must understand the trust laws of your state, know how to put assets into the trust, and in some states, file the proper documents with your county recorder's office. There are at least nine different types of trusts, and an experienced lawyer can walk you through each.
Once the trust has been created, most states require that it be signed in the presence of a notary. If you live in a state that does not have such a requirement, you may want to consider doing so anyway. That's because signing before a notary minimizes the risk of fraud and also makes it more difficult for someone to come forward and contest the trust.
Planning for final arrangements means that you can set out things like whether you want to be buried or cremated, if you want a funeral or would rather have another type of celebration, and how final arrangements have been (or will be) paid for. Although these plans are not legally binding, they can make life easier for the person who loves you following your death. Make sure you discuss it with them and keep it somewhere they can find it.
Thompson understands the significance of planning for every eventuality, including death and dying, especially for same-sex couples. He finds satisfaction in knowing that his clients are able to make their own end-of-life decisions.
"It's just a relief for them to know things will be taken care of. They can use the energy they were using to worry about not being prepared on something more important."
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