Estate Planning: The Basics For LGBT Families
With the passage of marriage equality last year, laws have been quickly changing across the United States. LGBT couples with or without children weren’t just given the right of marriage, they were provided new protections and benefits within their families. All of a sudden, LGBT couples and families had to figure out how to file jointly when it came to taxes, how to add their spouse and children on health insurances, and how the law determined things like birth certificates for new parents.
Many LGBT parents and couples have learned about these rights in the past seven months or so, but there is one aspect of family life that many parents or couples have not considered: estate planning.
What is estate planning? Estate planning is the process of preparing for the transfer of wealth and assets to your loved ones in the case of death. In laymen’s terms, who do you want your money, life insurance, and property to go to if you passed away? More importantly, who will have guardianship of your children in the case of an untimely death?
So for all of our LGBT families, here’s some basic information you should know about when it comes to estate planning:
- Find a lawyer
Your first step in estate planning is to find a great lawyer who knows the laws in your state and can guide you toward the right decisions for your family.
- Create a will
According to NOLO, a will is one of the most important aspects of estate planning. With a will you can:
- determine who will inherit your assets
- nominate a guardian for your children (VERY IMPORTANT!)
- arrange for an adult to manage any assets children inherit
- name an executor
- direct how taxes will be paid
A will can effectively carry out your wishes in the case of your death. If you die without a will, your property will be distributed according to your state laws. Additionally, if you have kids and have not named a legal guardian in your will, you run the risk of your children being fought over between friends or families and possibly even your partner if you have yet to be married or have divorced.
- Name a power of attorney
Naming a power of attorney is naming someone to manage your financial affairs in case you become incapacitated.
If you want your spouse to handle your financial affairs and not your family, name them your power of attorney now. It could effectively prevent arguments or stress between your loved ones.
- Set up healthcare directives
In the case of an accident, do you want to be resuscitated? Who do you want to make your health decisions if you are unable to? Determine to go ahead on a surgery or pull the plug? Though these are not pleasant things to think about, they are sadly a reality of any life and must be handled with proper estate planning.
Set up a health care power of attorney – there are documents for this. A health care power of attorney is just like a power of attorney except they make decisions about your health care.
Additionally, each time you go to the doctor, you are often asked to sign a HIPAA Authorization form that allows medical providers to discuss your condition with a specified individual. If you choose to list your partner on the sheet, be sure to make a copy before returning it to the doctor’s office so that if something happens, your partner will have proof that they can receive information about your health.
- Final arrangements document.
Determining if you want to be buried or cremated may seem like a dreary decision to make, but it can be very helpful to add to your will. Plan out your funeral arrangements, or at the least express where you want your resting place to be and how you wish to rest (cremation, burial, etc).
Once again, this can prevent a lot of stress or arguments between loved ones who will be taking care of these matters once you’ve passed.
- Be sure to include your spouse on your retirement plan or life insurance plan as a beneficiary.
Perhaps you’ve worked for the same company for ten years and just recently got married. Don’t forget to add your spouse to your 401K as a primary beneficiary! The same can be said for your IRA or life insurance that you’ve taken out. This can help your family be financially taken care of if you are not around.
- Create a trust
Creating a trust might be a great option for your family. It would allow for the seamless transfer of property outside of probate (which can be a long drawn out process).
This might also be part of a plan to reduce or avoid estate taxes. Don’t forget to ask your lawyer about this!
Granted, estate planning is far more complicated and extensive than what we have provided here. Our main goal was to give you a sense of the importance of estate planning, especially for LGBT couples with children.
So, make an appointment with a lawyer and complete an estate plan. Make sure you and your family are taken care for all stages of life.