Navigating the complexities of estate planning for LGBTQIA+ couples
In honor of Pride Month, we’re examining the importance of estate planning, and the ways the process might differ for LGBTQIA+ couples. The broad strokes of estate planning are generally the same for most people, but it’s something that many put off. It’s important for almost everyone to have a will and/or trust, durable power of attorney documents and an advance health care directive/living will.
It’s in the details of these documents -- and of one’s estate plan as a whole -- where the needs of each individual or family can be very different. For LGBTQIA+ couples, the issues involved can sometimes be quite complex. Whether a couple is married or in a domestic partnership can have some impact, as can issues involving Social Security, children and state residency. While none of these issues are unique to LGBTQIA+ couples, they’re areas worth taking a closer look at, to ensure that they’ve been considered.
We consulted with specialists from Commerce Trust to discuss areas of estate planning that LGBTQIA+ couples may need to pay extra attention to. The first thing each emphasized was the importance of having an estate plan.
Estate planning can be difficult for LGBTQIA+ couples – but it’s important and necessary
“We understand that it can be tough for LGBTQIA+ couples to talk about certain issues,” says Lisa Blake, a vice president and wealth management consultant at Commerce Trust. “That’s true for anyone. But as advisors, we are willing to ask the uncomfortable questions. Estate planning touches on subjects that are difficult for many people – death, family relationships and healthcare issues, to name a few. But it’s important to set that discomfort aside and put a plan in place.”
Blake says there are positive ways to think about estate planning, and that can help. “There are things you do during your lifetime that will help your loved ones and make sure they’re taken care of,” she says. “That’s the way I prefer to think about estate planning – it’s all about a positive mindset.”
Koji Watanabe, a vice president and senior financial planner at Commerce Trust, notes that estate planning is important for people of all income and savings levels. “It’s not just for the wealthy,” he says. “Almost everyone needs it. Without it, your beneficiaries may struggle, and not having an estate plan in place can create conflicts between your loved ones, particularly if there are strained relationships involved or your family doesn’t recognize your partnership.”
LGBTQIA+ couples can face unusual issues during estate planning
Fortunately, estate planning is easier for LGBTQIA+ couples today than it was in prior generations. “The 2015 Supreme Court decision Obergefell v. Hodges which legalized same-sex marriage in all 50 states made estate planning for LGBTQIA+ couples less complicated,” says Jared Roberts, an assistant vice president and private client advisor at Commerce Trust. “That said, individual situations can still end up being quite complex.”
Blake adds that there are important differences between a marriage and a domestic partnership when it comes to estate planning. “Certain retirement benefits may not automatically go to the other partner in a domestic partnership,” she says. “So, for example, if one partner dies, the surviving partner isn’t automatically entitled to their Social Security benefits. If a couple is married, on the other hand, the benefits transfer automatically. For reasons like that, there’s a heightened need for people in domestic partnerships to make sure their I’s are dotted and T’s are crossed on their estate plans.”
Another area of concern for LGBTQIA+ couples, as Roberts notes, is for them to confirm their current marital status if they were previously in a domestic partnership or civil union prior to the 2015 Supreme Court decision in Obergefell v. Hodges. “After Obergefell v. Hodges, some states automatically converted registered domestic partnerships and/or civil unions into legal marriages, while others did not." It’s important to be sure that your registered marital status properly reflects your current situation.
Children and healthcare issues are important areas for LGBTQIA+ couples to focus on in estate planning
LGBTQIA+ couples can sometimes also run into estate planning issues involving their children, since in many cases one or both parents are nonbiological. “It’s important to ensure your estate plan accounts for your individual situation,” says Blake. “To give an example, if a child was legally adopted by only one spouse who passes away, the surviving spouse may not automatically be granted guardianship of the child. The same may be true for children conceived through in-vitro fertilization if only one partner is a biological parent.”
It's also important to consider how you want to handle healthcare decisions in the event that you can’t make them for yourself. “If you want your partner to make medical decisions on your behalf, it needs to be addressed in your Durable Power of Attorney for Health Care,” says Roberts. “This can be extra important for LGBTQIA+ couples in case one or both partners are estranged from their families, or if the family wants to make decisions about healthcare that don’t align with the person’s wishes. It’s vitally important to have a Durable Power of Attorney for Health Care in place to cover these issues.”
The importance of staying up-to-date on estate plans
Even if you already have an estate plan in place, it’s a good idea to check up on it once in a while. “Evaluating your plan every three to five years is what I recommend,” says Watanabe. “It’s a good time to make sure your beneficiary designations on all your assets are still current. You should also review things when you have a major life event, such as a marriage, new child, or a move to a new state. Life changes over time; you may not realize how much has changed since you last reviewed your estate plans.”
The bottom line is, LGBTQIA+ couples should not overlook estate planning. “It’s smart for anyone to focus on it,” says Blake. “We all have our own stories and different things that are important to us. Getting estate planning taken care of and keeping it taken care of provides great peace of mind.”
The opinions and other information in the commentary are provided as of June 6, 2022. This summary is intended to provide general information only, and may be of value to the reader and audience.
Commerce does not provide legal advice to its customers. Consult an attorney for legal advice, including drafting and execution of estate planning documents. This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified tax advisor or investment professional.
Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Commerce Trust is a division of Commerce Bank. Mutual funds, annuities, and other investment products: Not FDIC Insured / May Lose Value / No Bank Guarantee