LGBT Estate Planning

Estate planning is a complicated task for all of us, but unmarried couples and especially same-sex couples face additional challenges.

ARTICLE XXX, Section 1, of the Arizona Constitution provides that “Only a union of one man and one woman shall be valid or recognized as a marriage in this State.”

Arizona’s laws dealing with inheritance were drafted accordingly. They work adequately for a traditional married couple. The needs of the LGBT community are not even contemplated. Gay and Lesbian couples must provide for themselves, through their estate planning documents, the rights that married heterosexual couples take for granted. Even if a couple is lawfully married in a State that permits Gay and Lesbian marriage, Arizona will not recognize their marriage. Neither will the Federal Government.

At a minimum, LGBT couples should have valid and up to date Wills, General Durable Powers of Attorney, Health Care Powers of Attorney and Living Wills. For example, without a will assets may transfer by default through what is known as intestate succession to such as a parent, a sibling or other blood relative instead of a partner as desired. Partners may need to make critical medical decisions for one another for which a Health Care Power of Attorney will be needed. Extra care must be taken in drafting these documents. Standard form documents available online cannot be relied upon to cover the necessary bases.

Before drafting documents, an estate planning attorney must take the time to learn about each Client, ask questions and listen to the answers. Some important questions to ask are:

  1. Has either partner ever been lawfully married? If so, has that marriage been terminated by annulment or divorce?
  2. What relationship does each partner have with the family of the other partner? What cooperation is to be expected in the event of a major illness or death of a partner?
  3. Does either partner anticipate difficulty from any source in the event of a death or illness?
  4. Do the partners have children? What is the status of any adoption or legal guardianship? Who should manage any inheritance money for the children should the partners die or become incapacitated?
  5. Does either partner have financial difficulty or debt issues?
  6. What assets are owned by each? What is their value? How are they titled? Do any retirement accounts or life insurance policies exist? Who is currently named as beneficiary on each?
  7. Where assets are jointly owned, who provided the money used to purchase the asset? Were the partners’ contributions equal or unequal? Does it matter?
  8. What are the tax consequences for either partner upon the transfer at death of any jointly owned or separately owned assets? Should life insurance be purchased to pay any anticipated tax? Should other tax planning be done?
  9. Is either partner responsible for the care of an elderly parent or other person?
  10. What funeral arrangements are desired? Who should handle the arrangements? What documents may be necessary to obtain a death certificate and make the final arrangements?

In preparation of the initial drafts of the estate planning documents, it is important to add specific language to clearly spell out the intent of each partner. Estate beneficiaries must be clearly specified and, just as important persons who are not to be estate beneficiaries must be specifically mentioned. Health Care Powers of Attorney should include special access provisions to direct who shall be allowed access to each partner in the event of a hospitalization—and who should not be allowed access if anyone fits into that category. Everything that is of importance should be spelled out in detail so there is no mistake as to intent.

If appropriate, a guardian and trustee for a minor child should be specifically named with the instructions that the named person shall take priority over all others. This is critically important if it is intended for a partner to be the guardian and custodian of a minor child. A court will determine the issue or who is to serve as guardian and it cannot be guaranteed that a partner, despite the testamentary nomination, will be selected. It is recommended that a partner also be named as trustee for the child’s inheritance, if any.

Also not to be overlooked are the funeral arrangements, handling of the body and who is to be responsible for these matters. Retirement account beneficiaries and Life Insurance Policy beneficiaries must be checked and updated as needed. The idea is to anticipate as many potential issues as possible and draft solutions for them.

The use of instruments to avoid probate such as revocable living trusts, beneficiary deeds and joint tenancy ownership of selected assets should also be considered. These have the merit of avoiding a probate and its publicity, delay and cost. They allow the private, quick and inexpensive transfer of assets to selected beneficiaries and are more difficult to contest. In the case of a revocable living trust, there is the additional benefit of also having help from a trustee selected in advance in the event of an incapacitating injury or illness. Not all assets need to be placed in trust. Often, only those assets intended for a partner are placed in trust and the partner is named as successor trustee. Other assets can be transferred by will or by an appropriate non-probate transfer.

Phoenix Estate Planning Lawyer:

The Arizona estate planning attorneys at Platt & Westby charge reasonable fixed fees to draft trust and related documents. Contact our office to schedule a free consultation with an experienced Phoenix estate planning attorney today.