Back in 2015, the Supreme Court ruled in favor of legalizing same-sex marriage. LGBTQ+ couples that choose to marry can now enjoy the same treatment as heterosexual couples when it comes to federally-backed programs and regulations such as Social Security and income tax filings. As you might expect, neither LGBTQ+ nor heterosexual couples are extended those same rights and protections. But data show a higher proportion of same-sex households remain unmarried when compared to opposite-sex couples. That’s why it’s crucial for LGBTQ+ couples to take steps to ensure their assets are titled appropriately, beneficiaries are named, and legal documents are in place so their wishes are honored in the face of incapacity or death.
As a CERTIFIED FINANCIAL PLANNER™, I’m here to provide financial peace of mind to clients and their communities. LGBTQ+ couples face unique challenges, and I hope the information shared today demonstrates how those challenges can be met.
Strategic estate planning is essential for all committed couples, regardless of gender or marital status. When it comes to things like asset titling and property rights, never make assumptions or leave anything to chance. It is essential for an LGBTQ+ couple to title their assets properly to guarantee their estate plan reflects their wishes.
Consider the hypothetical example of Charlie and Austin. They have been in a happy, stable relationship for many years and decided marriage is not for them. Charlie is the breadwinner who also has sole ownership of most assets the couple “shares.”
If Charlie passes away or becomes incapacitated without giving Austin ownership and access to these assets, Austin has no legal claim to them. It doesn’t matter how long they’ve been together or if they’ve discussed their wishes in the past. If it’s not legally in writing, Austin receives nothing.
The good news is titling assets for unmarried couples is a relatively simple and straightforward process. Let’s focus on a few ways LQBTQ+ partners can protect and share their property.
A will is a legal document that describes how your assets will be distributed upon your passing. It typically names an executor or personal representative who is responsible for carrying out the terms of the will. It also lists beneficiaries who will inherit the assets along with the terms for distributing those assets. The ability a will gives an individual to name specific beneficiaries is crucial for these couples. Charlie may not be ready to retitle assets, but his will could make sure Austin is taken care of should Charlie die first.
A will can ensure Austin takes possession of assets at Charlie’s death, but what happens if Charlie falls into a comma? Austin could have little or no authority to access accounts needed for Charlie’s (or his own) care. This is where the appropriate Power of Attorney (POA) documents come into play. Put simply, a POA gives someone the permission to act on another’s behalf. There is more than one type of POA – your advisor and estate attorney can help you understand what you need.
Community property is generally limited to married couples. Some states have limited exceptions to this rule. For example, community property law "by analogy” allows unmarried couples to utilize community property titling if certain legal requirements are met, including a written agreement demonstrating each partner’s consent to hold property together as if they were married. A CFP® and an LGBTQ+ estate planning lawyer can guide you through this process.
A joint tenancy with “rights of survivorship” gives both partners (or joint tenants) full control over an account during their lifetime. If one joint tenant passes away, the other automatically gains ownership of that account. This option helps surviving partners to avoid probate, which can be a costly and time-consuming process.
While the information I’ve shared is not necessarily groundbreaking, it is something many dependent partners overlook until it's too late. I hope this clarifies the importance of asset protection for LGBTQ+ couples and has inspired you to assess your own estate planning needs in the near future.
The laws regarding LGBTQ+ rights are continually evolving. It is important to work with a CFP® who is part of the community, or a trusted ally who is understanding of the community’s needs and prepared to shift when laws and guidelines change.
EP Wealth Advisors understand the state and federal legal and regulatory landscape regarding benefits plans, estate planning, and marital rights—so every financial plan we craft meets our clients’ unique needs and goals. Call to make an appointment with a CFP® specializing in LQBTQ+ financial needs today.
Disclosures:
EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. The information presented was obtained from sources deemed to be reliable. However, EPWA cannot guarantee the accuracy or completeness of the information offered.
Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. This report is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions with the appropriate professional(s).
EPWA is not engaged in the practice of law or accounting. Always consult with a legal or accounting professional regarding your specific situation before acting on anything referenced directly or indirectly herein.
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