Uncle Sam gives the best wedding presents. A Simon Pearce vase is divine, but it pales in comparison with the married filing jointly tax rates and unlimited marital estate tax deduction.
Regrettably, even though they embody the same levels of love and commitment, same-sex couples do not receive these gifts from Uncle Sam.
Financial planning for same-sex couples is rife with difficulties. Few states provide rights to same-sex couples, and among those that do, the rights are not uniform. (See below.) The federal government currently denies all marriage rights to same-sex couples, though that may soon change. Because of numerous gray areas, all such couples need financial planning, especially if they have children. Plans must make the couple's intentions very clear in the event they are contested. They should also be revisited often to stay current with legislation.
Given the complicated variation among states, moving or traveling can be especially treacherous. If you do not live in the state where you were married or if you plan to travel extensively out of state, some key planning moves can ensure that your relationship and intentions are respected.
Generally, hospitals allow visitation rights to spouses and other family members. If the state does not recognize your relationship, your partner is not considered a family member. He or she may therefore be denied visitation rights and the ability to make medical decisions on your behalf.
To prevent this situation, execute a power of attorney, which permits your partner to act as your agent in both health and financial matters. Although it can be inconvenient, you should carry a copy when you travel. Do not assume that the arrangement will be respected in other states, particularly if it differs significantly from that state's power of attorney forms; however, such documentation should help the healthy partner present his case to hospital staff.
States that allow same-sex marriages or that provide an equivalent often have intestate rights for surviving partners. These allow for a portion, if not all, of the deceased partner's property to pass to the surviving partner, even if the deceased did not execute a will. However, a state that does not recognize the relationship will not have these rights. If you die without a will in one of these states, your partner will not be provided for from your estate. Your property will instead pass to your biological family based on the state's laws.
The first defense against this is to have a will that provides for your partner and your children. Make sure your family members are aware of how you would like your property to be distributed after your death to avoid surprises and potential will contests. You may want to include positive statements as to why you choose to leave property to your partner instead of your biological family.
You can also dispose of assets outside of your will, where possible. Retirement accounts, life insurance policies and trusts pass to their beneficiaries outside of the probate courts. Titling property as jointly owned with rights of survivorship will permit the surviving partner to inherit the jointly owned property.
Your will should also make clear your intent regarding burial arrangements and that your partner should be granted possession of your remains upon your death. Typically, the deceased's remains are given to the next of kin. If a same-sex relationship is not recognized, the surviving partner will not be deemed a family member. He or she will not be granted authority over the body and its disposition. Historically, courts have respected the deceased's intent and therefore it is important to have support for your last wishes.
States permitting same-sex unions will usually permit non-biological parents to sign a child's birth certificate as a parent. However, this does not necessarily provide full parental rights, especially in states where the relationship is not recognized. Adoption by the non-biological parent is a potential solution. This is particularly important in the case of a medical emergency and intestacy. Without adoption, the non-biological parent might be denied the right to make medical decisions for his or her child or to visit the child in the hospital. Should the biological parent die intestate, the non-biological parent may not be granted custody by the state. Furthermore, if the non-biological parent dies intestate, the child might not be eligible to inherit from him or her.
When executing estate-planning documents, same-sex couples have less room for error than heterosexual couples. You do not want the legitimacy of the documents to be challenged. If they are overturned, the state's laws are unlikely to create your desired outcome. Therefore, choose a financial planner and attorney team that is familiar with the laws regarding same-sex couples. Also, your documents and plans should be reviewed often to stay current in the highly dynamic legal environment.
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