Estate planning for gay couples |
| By Dana Dratch
• Bankrate.com |
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For gay couples, estate planning can be incredibly frustrating.
"Domestic partners have a lot of planning to
do, and have to fight discrimination at every turn," says Todd
G. Sears, vice president at Merrill Lynch, and founder of the company's
lesbian, gay, bisexual and transgender financial services team.
In many
cases, the law doesn't recognize domestic partnerships. And if the estate is worth
more than $2 million, a surviving partner can face a hefty federal estate tax
bill. In some states, the threshold for state estate tax is lower. Even
if you're well under the $2 million mark, if there is anyone who depends on your
income, you really need to sit down with an attorney and do some planning.
Avoiding courts
One concern for same-sex couples "is avoiding
courts on death," says Janet Dobrovolny, founder of the California-based
Law Offices of Dobrovolny & Moon and estate planning consultant
of "Suze Orman's Will & Trust Kit."
First,
everything in a will becomes public during probate. Second, going through probate
means notifying all potential heirs and giving them a chance to contest the will,
she says. For that reason, Dobrovolny favors trusts for many assets. "In
most states, they can be 100 percent private," she says. Plus, challenging
trusts is much more difficult than challenging wills, requiring more effort, time
and money. Another issue: While
some states recognize gay unions and will allow you to hold joint property without
estate tax issues, others don't. And the federal government doesn't either. So
your estate planning strategies may differ depending on where you live.
Partners also need to get "detailed advice"
on passing everyday shared assets, such as bank accounts and the
home, says David Buckel, senior counsel for Lambda Legal, a nonprofit
civil rights group serving the gay community.
Best
bet: Find an attorney who is experienced in both estate planning and the
local and federal laws concerning same-sex couples. Your attorney should be able
to offer you a variety of options depending on the size of your estate, your family
situation and what you want to do with your money.
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Here are some items you can discuss: | |
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A will.If
you want any control over who gets your assets, you need a will.
"That's basic," says Joan Burda, attorney and author of
"Estate Planning for Same-Sex Couples." Unfortunately,
"a lot of people think if they have joint accounts and property
held jointly, they don't need a will."
If you have kids and you're the legal parent, you
can name a guardian you would like to raise them if you're not around.
Many states don't allow gay couples to have joint custody, so the
death of the legal parent can ignite a custody battle.
If
you suspect your family will contest your guardianship choice, you might also
want to name your partner as the trustee for any trust you set up for the kids
-- and stipulate how often you want the trustee to see the kids, says Burda, who
refers to this as the "Auntie Mame" clause. That way if a family succeeds
in overturning your selection for guardian, the children will still have contact
with your partner.
A shared
custody agreement. Some states will allow the legal parent
to draft a contract for shared custody with a domestic partner.
This could be very helpful in keeping the family together if the
legal parent dies. The downside is that if you and your partner
break up, you will still be sharing custody.
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