Estate Planning for Same-Sex Couples: A Guide

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. Yet death and dying are a part of life, and that's why estate planning for same-sex couples matters. An estate plan lets us call some of the shots while we are still able.

Brian Thompson, owner of Brian Thompson Financial, lives in Chicago with his husband of nearly five years. 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 in person and in his blog, including advice on estate planning for same-sex couples.

"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 is even more critical for unmarried couples, especially if there are children involved. Everything you need to protect your partner is included in estate planning documents -- from a living trust to estate tax issues. In short, a proper estate plan can give you peace of mind.

Documents you need for your estate plan

Estate planning for same-sex couples is not a one-size-fits-all proposition, but here are some of the documents that can help any same-sex couple.

Will

Estate planning for same-sex couples should include a will. A will states who inherits 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.

"Intestate" means you've left behind no will, and your estate will be distributed according to state laws. That can be difficult on a surviving partner, particularly if you're not married. No matter how much you value a domestic partnership, your surviving partner may end up out in the cold legally and financially speaking. Intestate laws frequently mean the surviving partner has no rights to your assets or access to your savings account -- even if you worked together to build them.

Proper estate planning for same-sex couples -- including a will -- allows you protect your domestic partner or spouse. Many prefer to have a will 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 use an online service that provides only a template, or one that walks you through each step of the process. Make sure you understand the rules in your state, how to get it signed and witnessed, and whether you need to get it notarized.

Estate planning for same-sex couples may include finding a trusted friend to keep a copy of a will, particularly if your family does not approve of your relationship. 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. If your family is not involved, make sure the friend has a copy.

Medical and financial power of attorney

Thompson considers a power of attorney (POA) 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 give different people power of attorney for different functions. For example, you may want one person to make medical decisions and another to make financial ones. You know your spouse best. If making a health care decision (or financial decision while under pressure) would be difficult for him or her, name someone else as POA during the estate planning process.

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 estate planning for same-sex couples and 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, file a copy of your medical POA with your doctor's office and a copy of your financial POA with your bank or credit union. Make sure your spouse or partner knows where you have left copies.

Living will

Living wills are typically part of estate planning for same-sex couples. Known in some states as a "Directive to Physicians" or "Healthcare Directive," living wills allow you to set out your wishes in case you become incapacitated. It can protect your loved ones from having to guess your wishes and in some cases, can avoid court battles. It answers difficult questions like, 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 is included. If you prefer to prepare one yourself, it's not difficult. Templates are available online and, depending on the laws of your state, become legal once 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 your home.

Living trust

A living trust is a financial agreement that creates a third-party to hold assets on behalf of beneficiaries. It is primarily used to minimize estate taxes and protect assets. According to Thompson, estate planning for same-sex couples does not necessarily call for a trust. But if you need one, it's best to 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 kit and filling it out. You must understand the trust laws of your state regarding estate planning for same-sex couples, learn how to put assets into the trust. In some states, you must file the proper documents with your county recorder's office. There are many types of trusts, and an experienced lawyer can walk you through them.

Once the trust is created, most states require you to sign it in the presence of a notary. If you live in a state that does not have such a requirement, 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 contest the trust.

If your version of estate planning for same-sex couples includes a living trust, it pays to get the details just right.

Final arrangement plans

Finally, estate planning for same-sex couples should include final arrangement planning. Final arrangement plans set out things like whether you want to be buried or cremated, if you want a funeral or another type of celebration, and how final arrangements get paid for. Although these plans are not legally binding, they can make life easier for your surviving spouse. Make sure you discuss your plan with your partner and keep it somewhere they can find it.

Thompson finds satisfaction in knowing that his clients are able to make their own end-of-life decisions, especially in the context of estate planning for same-sex couples. "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."

While taking on any portion of estate planning for same-sex couples, it's important to know the laws of your state. They may differ, depending on whether you're in same-sex marriage, have a domestic partner, or are in a civil union. If you're at all confused, consider working with an attorney like Thompson who can help you sort it all out.