LGBTQ+ Estate Planning - Same, But Different

When it comes to same-sex/LGBTQ+ couples, estate planning tools are the same as hetero couples, but they’re used in slightly different contexts, and that distinction can make all the difference.

Since the Obergfell v. Hodges decision in 2015, same-sex marriage has been legal in the United States. This means that for married same-sex couples, they are legally protected by the same legal tools heterosexual couples have been using. However, not all couples are legally married, and that can be for a variety of factors - family dynamics, complex interpersonal relationships, or their own personal feelings about the institution of marriage. This means that a proper and comprehensive estate plan needs to take all of these variables into consideration. (To be fair, these same issues arise with long-term unmarried straight couples - Kurt Russell and Goldie Hawn have been together since 1983 and aren’t legally married, for example.) Here are just a few things to discuss with your estate planning attorney to make sure you’re not leaving anything out.

Make an Estate Plan if You Are an Unmarried Couple

As stated above, unmarried couples, whether straight or LGBTQ+, are at risk if things are not formalized in an estate plan. This will prevent the surviving partner from being shut out or denied benefits.

1. Make a Will

The centerpiece of every estate plan is the will. The will does several things:

• names the executor (the person responsible for carrying out your wishes)

• determines who will inherit your assets

• nominates a guardian for any children

• arranges for an adult to manage any assets those children inherit

In New Jersey, the laws of intestate succession determine the heirs of a person who dies intestate (without a will). The order typically goes spouse → children → parents → siblings → grandparents → aunts/uncles. Depending on your family dynamics, that could make for a messy situation.

2. Take Steps to Avoid Probate

Probate is the process of distributing assets after death. All wills in New Jersey must be submitted for probate to ensure the heirs receive what they are legally entitled to. This also means they become public record, and some people might have privacy concerns. The more assets fall under probate, the longer the process can take. This can be avoided by using some or all of the following:

• Joint ownership (most commonly used in the context of real estate)

• Living trusts (legal creations that exist outside of the probate process and don’t have to wait for court review)

• Transfer-on-death accounts (also known as Totten trusts, these are usually applicable only to bank accounts)

3. Avoid Inheritance Taxes

The federal estate tax is for estates over $15 million. (If your estate is that large, call me!) New Jersey eliminated the estate tax in 2018. However, the inheritance tax remains. Beneficiaries are divided into classes, and each class pays a different tax rate depending upon their relationship to the decedent.

• Class A: spouse, civil union partner (under couples who were legally joined under civil unions), parent, grandparent, child, stepchild, grandchild, or other lineal descendant. These people pay no inheritance tax.

• Class C: siblings and sons/daughters-in-law. These people can receive up to $25,000 without tax. After that, the tax rates are: 11% on the next $1,075,000, 13% on the next $300,000, 14% on the next $300,000, and 16% for anything over $1,700,000.

• Class D: everyone else. There are no exemption amounts. The tax rates are: 15% on the first $700,000, and 16% on anything over $700,000.

• Class E: The state of New Jersey, schools, churches, hospitals, libraries, and other non-profits. These beneficiaries are exempt.

This means long-time partners will be hit with a huge tax bill if the estate plan is not set up properly. Even beloved nieces and nephews will stand to inherit less than originally intended if things are not placed in a trust for them.

4. Make a Health Care Directive

A health care directive dictates your wishes for any end-of-life care in the event you are unable to speak for yourself. These typically have two parts to them:

• the advance health care directive, also known as a living will - this states what kind of care you want or don’t want (life support, do-not-resuscitate, etc.)

• the health care proxy or health care power of attorney - this names the person you want making the decisions for you

This is one area where the legal status of your relationship is irrelevant; a long-time unmarried partner can serve as the proxy as long as the document is validly executed. (This isn’t to say families can’t potentially challenge things, but the hospital should recognize the legal authority of the proxy regardless.) There are also HIPAA considerations that can be covered by a valid directive; without them, the doctors will not be allowed to discuss your medical condition with a partner.

5. Make a Financial Power of Attorney

A financial power of attorney gives another person power of your finances in the event you cannot advocate for yourself. Similar to the health care proxy, the person named in the document does not have to have any legal relationship status. Financial powers of attorney can be durable (in effect upon signing) or springing (only take effect in the event of incapacitation).

6. Determine Final Arrangements

Your estate plan should also include arrangements for the disposition of your remains. You can be as specific as you wish with respect to:

• Burial vs. cremation

• Organ donation

• Caskets, urns, or mausoleums

• Headstones or burial markers

• Ceremonies

• Paying for final arrangements

The person responsible for carrying out these wishes should be notified in advance. It’s important to note that these documents are not legally binding, but they are helpful to prevent any ambiguity over your wishes, particularly if you feel there could be potential pushback from other people in your life.

7. Handling Digital Assets & Legacies

For many LGBTQ+ people, online communities form a foundational part of their legacy. Naming a digital executor ensures that your online profiles are managed with the care and decency they deserve. Some larger profiles, like Meta & Google, allow you to name a legacy contact to take over your account after your death, but most sites don’t include that, so a set of instructions with login credentials is vital. It’s important to note that probated wills become public record, so do not include any sensitive information, like passwords, in the will itself.

For LGBTQ+ couples, estate planning is about protecting the people who matter most: partners, children, and chosen family. A comprehensive plan honors the life you’ve built, minimizes risk to your legacy, and ensures your wishes are honored. Anthony understands these issues, and can help insure your legacy. If you have any questions, schedule an appointment through the online contact page.