LGBTQ+ Estate Planning to Protect Yourself and Your Loved Ones

Everyone needs estate planning. Regardless of your wealth, age, marital status, gender identity, or sexual orientation, it is crucial to have a plan in place to protect your money, assets, and loved ones in the event of an accident, illness, or death.

For LGBTQ+ Americans, estate planning can be even more important. Same-sex marriages were legally recognized in 2015, yet couples composed of sexual and gender minorities still face estate planning challenges not encountered by other “traditional” same-sex couples. Issues such as unaccepting family members, child adoption by nonbiological parents, and LGBTQ+ couples living together but unmarried underscore the need for proper estate planning.

Without a plan, you and your family will be subject to your state’s default or intestate succession law, which may not take into account LGBTQ+ couples’ realities, families, and dynamics. And if your plan was created before 2015, you may need to revise it to ensure that it reflects the latest legal rights granted to married same-sex couples.

First Census Data on the LGBTQ+ Community
In the 2020 census, the US Census Bureau asked Americans about their gender identity and sexual orientation for the first time. Its findings include the number of same-sex couples living together and the current percentage of Americans who identify as LGBTQ+.

According to the Census Bureau, there are

  • 543,000 same-sex married couple households,
  • 469,000 same-sex unmarried partner households, and
  • 191,000 children living with same-sex parents.

The Census Bureau notes that same-sex couples are more likely than opposite-sex couples to be unmarried. Overall, same-sex married couples currently account for approximately 1 percent of US married-couple households. The data also indicate that while more than 88  percent of Americans identify as straight, 4.4 percent identify as bisexual and 3.3 percent identify as gay or lesbian.

Research by the Gay and Lesbian Alliance Against Defamation has found that younger people are significantly more likely to identify as LGBTQ+ than members of older generations. The GLAAD study found that 12 percent of all US adults identify as LGBTQ+, but 20 percent of millennials identify as LGBTQ+—nearly three times the number of baby boomers.

Key Steps in Creating an Estate Plan
Estate planning is not just for the wealthy. Most basically, an estate plan addresses the possibility of an illness, accident, or aging leading to your inability to communicate with healthcare providers or to handle your financial matters. Estate planning also addresses what happens to things you own after you pass away. In your estate plan, you arrange for the distribution of your real estate, vehicles, bank accounts, and investments, as well as payment of any outstanding debts.

Following is a quick overview of the basic estate planning documents that are included in most estate planning:

  • Will: A last will and testament is a foundational estate planning document. It details how your assets are to be distributed following your death and who should be in charge of the process (the personal representative or executor). It also names a guardian for your minor children if the other parent dies before or at the same time as you. Without a will expressing your wishes and direction, state law makes these decisions for you.
  • Trusts: Trusts can act as a will substitute. A trust is a legal arrangement that allows a trustee to hold assets for the benefit of a beneficiary. There are many different types of trust, but one that is used in many foundational estate plans allows you, the person setting up the trust, to act as trustee for your own benefit. The trust would then name the trustee to act after you, when you are incapacitated or pass away, and would name the beneficiaries to receive the income or principal of the trust after your death. The trust is an arrangement that avoids probate, the court proceedings necessary with other types of planning.
  • Healthcare Power of Attorney: A healthcare power of attorney, sometimes known as an advance directive, authorizes who you wish to act on your behalf if you become unable to communicate with your healthcare providers yourself. It can be used to authorize appropriate medical care and procedures as well as to express your wishes regarding life support and the treatment you would or would not want.
  • Powers of Attorney: A power of attorney authorizes another person to act and make legal decisions on your behalf regarding financial matters. If injury or illness left you unable to manage your financial affairs yourself, the power of attorney names who you wish to act for you and gives legal authority for the things that they can do.
  • Beneficiary forms: Beneficiary forms allow you to specify who should collect the money from your insurance policy or retirement accounts when you die. Beneficiary forms can override your will or trust, so they should be coordinated with your overall plan. Also note, a former partner or spouse whom you previously named on a beneficiary form could cash in on your 401(k), IRA, or life insurance policy if you do not update the designations.

What Happens When You Do Not Have an Estate Plan
If you do not create your own estate plan, the local probate court, based on state law, will determine who would act on your behalf and decide what happens to your money and assets. This approach if generally not favorable, but for the LGBTQ+ community, there are a few factors that could make the state’s plan even more undesirable.

Even if you are married, state law may not provide for your spouse to receive all your assets. If you are single, your money and assets could go to a family member who does not support your sexual orientation or gender identity and with whom you may have fallen out.

The same applies to people you name as trusted decision makers, such as your agent under a financial or healthcare power of attorney. Even if you are married, your spouse does not have legal right to make financial and medical decisions for you. Without a detailed estate plan, your spouse, who might have priority under the law, could end up having to go to court to get these legal powers. And if you are single, the court could appoint a family member to make these decisions for you, even if you are estranged from them.

For LGBTQ+ couples with children, the situation can be particularly complicated. One, or neither, partner may be the biological parent. The couple may have used an egg or sperm donor or a surrogate mother to conceive the child. It is important to consult state laws on parental rights, but the biological parents’ legal rights usually have priority. A court order, such as an adoption, can firm up LGBTQ+ parents’ rights. But if the biological parent dies without a will, their biological family—not their spouse or partner—could receive custody if their spouse or partner is not legally recognized as a parent.

Update Estate Plans Regularly
LGBTQ+ individuals can appreciate that the social and legal landscape can change quickly. Gallup polling indicates that since 1996, support for gay marriage has increased from 26 percent to 70 percent.

Prior to the 2015 Supreme Court ruling in Obergefell v. Hodges, couples may have pursued legal arrangements such as civil unions and domestic partnerships in lieu of marriage. These arrangements can affect your current estate plan because previously recognized relationships that have not been reversed can give past partners a legal interest in your estate. In addition, your estate planning documents should contain terms such as husband, wife, or spouse that are consistent with today’s marriage laws.

Beyond considerations specific to LGBTQ+ estate planning, your estate plan should reflect your current life and wishes. If you have acquired new property, received an inheritance, or experienced another major life event, update your plan accordingly. Estate plans should be reviewed every few years to assess changes in circumstances and law that may have an effect on the plan.

We Are Here to Help
Whatever your sexual orientation or gender identity, it is critical to have an estate plan that gives you control over what happens when you are incapacitated or no longer around. We can help you implement a plan that is unique to your needs. For questions about estate planning, or to get started on your plan, please contact our office to schedule an appointment.