June 2015 marked a huge win in the legal rights battle for same-sex couples when the United States Supreme Court ruled that same-sex marriage is a fundamental right that must be legally recognized in all 50 states ( Obergefell v. Hodges.) As with all married couples, estate planning is a critical part of proper financial planning. Certain issues, however, are unique to same-sex couples and are worth highlighting here.
Need for a Will
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All responsible individuals with assets should have a Will. Same-sex couples who aren’t married, however, are particularly vulnerable without a Will. Just because same-sex couples can now legally marry doesn’t mean that all will opt to do so. Since many have been cohabitating and unmarried for so long, a lot will simply choose to stick with the status quo. But without a Will, your property would pass according to your state’s inheritance laws – which typically benefit children, parents, siblings, and so on. These laws do not take into account unmarried partners, un-adopted children or even close friends, so there is a chance your assets could pass to unintended beneficiaries. The best way to make certain your assets pass to your loved ones is to have a current, valid, written Will.
If a same-sex couple is raising children together and only one partner is the legal parent, a landmine of potential issues exist. These concern custody, social security and health insurance benefits, and inheritance. For example, if the legally recognized parent dies, the other parent may lose custody of the child to the relatives of the legal parent. If the non-legal parent dies, the child may not be entitled to receive survivor benefits such as social security that otherwise would be available. It may be advisable to do what’s called a “second-parent adoption.” A legal process (allowed in both New Jersey and New York) by which a co-parent can adopt the biological or adopted child of his or her partner. This type of adoption often occurs when one partner has already adopted a child and the other partner later wants to adopt the same child. If the second parent adoption isn’t done, then, at the very least, a Will should name the non-legal parent as guardian of the child.
Living Will/Health Care Power of Attorney
Not every state will automatically give the spouse the right to make health care and end of life decisions for someone. It’s best, therefore, to have in writing the same-sex partner who should be entrusted with making these important decisions. Lack of a Health Care Power of Attorney could make for a stressful situation if there is a dispute between spouse and family members. Sometimes, family members’ acceptance of the same-sex union can change suddenly in the face of life-threatening situations.
Same-sex couples who choose to marry now have built in protections for benefiting from each other’s retirement accounts. Federal pension law requires that the spouse be the primary beneficiary of retirement plans, so the employee cannot simply name someone else unless the spouse specifically waives the benefit.
Funeral and Burial Wishes
Last, but not least, making your final wishes known can calm concerns and put to rest any questions about your desires. This may be of particular help to your partner if you anticipate that other people in your life may have strong opinions about how to lay you to rest. You can also name your partner as the one authorized to make these important decisions.