Myths and FAQs: Estate Planning for LGBTQ Clients

Myths

Because same-sex marriage is recognized in all fifty states, I do not need to worry about estate planning, as my spouse will receive everything when I die.

It is true that, absent proper estate planning, the law will distribute most (if not all) of your money and property to your spouse. However, this may not be the best way to pass on your money and property. If everything passes to your spouse outright, there is no protection for the property or money your spouse receives. Even if you want your spouse to be free to spend their inheritance from you as they please upon your death, your money and property would become 100% your spouse’s, and they could do whatever they want with it–including lose it to creditors or to an anticipated lawsuit or accidentally disinherit your children when assets pass to a future spouse. By creating a trust, the money and property can be available for your spouse’s use, but you can provide protections to ensure that creditors, or a second spouse, do not have access to what you have worked so hard to earn.

Additionally, without estate planning, including the creation of a trust, your money and property may have to be distributed through the probate process. Probate is a court-supervised process where an appointed individual gathers your money and property, pays all of your outstanding bills, and then distributes the remainder to the appropriate individuals. Depending upon the situation, the level of court involvement can vary, but no matter what, the details of this process can be found out by anyone because probate is a very public process.

FAQs

My family and I have not spoken in years. How do I prevent my family from causing problems for my spouse after I die?

One solution is to create a trust and title all of your accounts and property in the name of the trust. This will allow you to have access to and enjoyment of your money and property, as you can name yourself as both the current trustee and the current beneficiary. However, in the trust, you can designate what will happen to all of the accounts and property once you have passed, as well as who will be in charge of carrying out your wishes. Then, upon your death, the terms of the trust will be carried out and the accounts and property will be distributed to the named beneficiaries by the person you have selected, without court involvement.

In addition, if you are worried about your family contesting your wishes, memorializing them in a proper legal document such as a trust and will is critical. Be sure to express your concerns to your estate planning attorney who can discuss whether your state recognizes a “no-contest clause.” Missouri does recognize such clauses. A no-contest clause can be included in your will and trust, creating a penalty for any beneficiary challenging your wishes and helping lessen the chances that a family member or beneficiary could legally challenge your estate plan.

My partner and I have been together for 20 years but have never gotten married. Should we get married? If we don’t get married, how can I ensure my partner is taken care of?

Whether to get married is a personal decision. In addition to the emotions involved in making the decision, there could also be tax implications. Consider sitting down with an experienced estate planning attorney and an accountant or CPA to analyze the tax or financial impact this decision would have on your planning.

If you choose to remain unmarried, a properly executed estate plan will ensure that your partner is taken care of. A will or trust will allow you to designate the money and/or property that you want to go to your partner. A financial power of attorney will allow your partner to act on your behalf for financial matters and a medical power of attorney will allow your partner to make medical decisions for you if you are alive but not otherwise able. Additionally, if you have a retirement account or life insurance policy and would like those amounts to go to your partner, make sure that you have properly named them on the appropriate beneficiary designation forms.