LGBTQ+ Estate Planning: Protect You and Your Loved Ones

Everyone has the right to protect their financial future. At Anderson, Dorn, & Rader, we are firm believers that people identifying as LGBTQ+ should have a comprehensive estate plan in place to ensure that wishes are clear and contentious, costly legal battles are avoided. In the event of an accident, illness, or death, are your finances laid out? No matter your age, sexual identity, orientation, wealth, or marital status, we are here to help you protect you and your loved ones through the estate planning process.

Obergefell v. Hodges, the 2015 case that legalized same-sex marriage in the US, was a long overdue victory for LGBTQ+ people and allies. While it did simplify some aspects of estate planning for LGBTQ+ individuals, it did not resolve all of the complex issues ingrained into our nation’s discriminatory legal framework. The reality is that sexual and gender minorities will face challenges that “traditional” people and couples will not. These challenges can involve family members who do not recognize your relationship, child adoption by same-sex couples, and unmarried couples living together.

It’s important to prepare for such instances, otherwise you and your family could be subject to Nevada’s default intestate succession law, which doesn’t always take into account LGBTQ+ couples’ relationship dynamics. Additionally, if you have an existing estate plan that was created before 2015, don’t assume that your same-sex marriage status was automatically updated. Often times, it’s not. A checkup will determine if revisions are necessary to reflect the latest legal rights onto your same-sex marriage life plan.

A Look at Census Data from LGBTQ+ Individuals

The 2020 US Census finally shed light on some LGBTQ+ matters, including the percentage of same-sex couples living together and the number of Americans identifying as LGBTQ+.

The 2020 Census found there are:

• 543,000 same-sex married couple households,
• 469,000 same-sex unmarried partner households, and
• 191,000 children living with same-sex parents.

The US Census Bureau found (perhaps unsurprisingly) that same-sex couples are more likely to be unmarried than heterosexual couples. Same-sex married couples account for only ~1% of the nation’s married couple households. 2020 Census data also indicate more than 88% of American adults identify as straight, while 4.4% identify as bisexual, and 3.3% identify as gay / lesbian.

Additionally, the Gay and Lesbian Alliance Against Defamation found that young people are significantly more likely than their older-generation counterparts to identify as LGBTQ+, likely due to more widespread social acceptance. Among the entire US population, 12% of adults identify as LGBTQ+, while 20% of millennials identify as LGBTQ—nearly three times the number that Baby Boomers indicated on their Censuses.

Important Steps in Creating an Estate Plan

The word estate can conjure images of a large, lavish country home, but the legal term is different. In this case, it’s all of the property and money a person owns.

Your estate is comprised of all the physical assets you own (vehicle, home, and everything in it). Additionally, it takes into account your bank assets and liabilities, such as investments, business interests, and any outstanding debts you have at the end of your life.

Essentially, estate plans are written instructions on how you’d like your money and property to be distributed when you die. It also considers the circumstances surrounding your ability to make cognitive decisions if you suddenly become ill or incapacitated. The following are the essentials you should have in your estate plan, whether you’re LGBTQ+, straight, or anywhere else on the spectrum:

• Will: Formerly known as your last will and testament, the will is perhaps the most important planning document in your life plan. When you die, it lays out how your estate will be distributed, and who will be in charge of the distribution (either your executor or personal representative). Additionally, it defines the guardian for your minor adopted children in the event that your partner dies before or at the same time as you. If a will is not created, Nevada’s intestate succession law takes precedence.
• Trusts: The probate process takes inventory of all your banking and physical property, pays off your debts, if any, and distributes the estate items to the designated beneficiaries. A trust legally grants another person the ability to hold and maintain your estate for the benefit of your named beneficiaries. The lengthy probate process can be avoided by setting up trust ownership or designating beneficiaries prior to death. Doing so may also enable your family to avoid estate taxes. For instance, you can set up a trust to hold and manage money for your child until they are of age, instead of leaving it directly to them when you die. A little bit of trust planning can go a long way to strengthen the financial picture of the assets you leave to loved ones.
• Living will or Advance Directive: A living will or advance directive defines what types of treatment you wish – or don’t wish – to receive at the end of your life. This can include whether you’d like to be resuscitated or put on life support. It is enacted when you become incapacitated or too ill to communicate your wishes clearly.
• Powers of attorney: A power of attorney grants another person the legal fortitude to make decisions on your behalf. With similarities to a healthcare POE, a financial power of attorney manages your finances when you become incapacitated or mentally unfit in old age.
• Beneficiary forms: You’ll likely have life insurance and retirement assets that need be collected when you die. A beneficiary form specifies which individual will do the collecting. Important: beneficiary forms can override a will, so they should reflect your current relationship and situation. If left unchecked, a former partner or spouse previously named as your beneficiary could collect the leftover money in your 401(k), IRA, or life insurance policy.

The Pitfalls of Not Setting Up a Life Plan

If you don’t plan for what happens to your estate when you are gone, someone else will – and that entity won’t always have your best interests in mind.

Failure to establish an estate plan transfers the decision-making power to the state. From there, they’ll determine where your money and property goes according to Nevada intestate succession law. For the LGBTQ+ community, this is an undesirable outcome due to the inequitable factors within the state’s intestate succession law.

Depending on the state’s laws, your spouse may or may not receive all the items in your estate. The laws could pose greater risk if you are single, as your money and property could go to a family member who does not internally legitimize your relationship or sexual orientation based on their own beliefs.

Unfortunately, even if you are married, your spouse cannot unilaterally make financial and medical decisions for you in the event that you become incapacitated. That’s why it’s important to create a detailed estate plan. Without it, your spouse may have to navigate the legal process to obtain decision-making powers after you pass. Even worse, the court could appoint a family member, no matter how estranged, to make these important decisions for you.

For LGBTQ+ couples with children, further legal complications can arise. The biological parents of the child(ren) usually have legal priority. In severe cases where one, or neither partner, are biological parents, the child could be assigned to their birth parents after you die without a will. Proper planning, such as an court-ordered adoption, can strengthen rights to avoid such cases where LGBTQ+ parents are not legally recognized as guardians.

Regularly Update Your Estate Plan

Luckily, social acceptance for LGBTQ+ people has been steadily increasing over the last few decades, though it still has a long way to go. According to Gallup polling, support for gay marriage has increased from 26% to 70% since 1996.

Civil unions and domestic partnerships were common “workarounds” for homosexual couples to be together prior to the 2015 Supreme Court ruling that made same-sex marriage legal. Unfortunately, previously-recognized arrangements are not automatically updated to reflect current marriage laws within estate planning. This means that without proper reversal, past partners can have a legal interest in your estate. Therefore, it’s important to update the terms of your life plan to reflect your current relationship status, which should include terms like husband, wife, or spouse.

Beyond your current relationship interests and status, your estate plan should also consider other life events that may have taken place. For instance, perhaps you acquired property, received an inheritance, or adopted a child! Our LGBTQ estate planning professionals recommend updating your plan every few years to keep up with life events.

AD&R is Here to Help

No matter if you identify as LGBTQ+ or not, it’s important to have a well thought out plan for how your estate will be distributed after you pass. Anderson, Dorn, & Rader are the region’s only estate planning lawyers who are allies in providing comprehensive financial guidance and documentation for you and your loved ones.

We will create a curated plan that captures your financial picture and situation. For questions about LGBTQ+ estate planning or to get started, please contact Anderson Dorn & Rader to set up an appointment with our knowledgeable attorneys.

References:

1 U.S. Census Bureau, Who Is Living Together? Same-Sex Couples in the United States, Census.gov (Nov. 19, 2019), https://www.census.gov/library/visualizations/2019/comm/living-together-same-sex.html.

2 Brian Glassman, Census Bureau Implements Improved Measurement of Same-Sex Couples, Census.gov (Sept. 17, 2020), https://www.census.gov/library/stories/2020/09/same-sex-married-couples-have-higher-income-than-opposite-sex-married-couples.html.

3 Id.

4 U.S. Census Bureau, Sexual Orientation and Gender Identity in the Houeshold Pulse Survey, Census.gov (Nov. 4, 2021), https://www.census.gov/library/visualizations/interactive/sexual-orientation-and-gender-identity.html.

5 New GLAAD Study Reveals Twenty Percent of Millenials Identify as LGBTQ, GLAAD (Mar. 30, 2017), https://www.glaad.org/blog/new-glaad-study-reveals-twenty-percent-millennials-identify-lgbtq.

6 Id.

7 Justin McCarthy, Record-High 70% in U.S. Support Same-Sex Marriage, Gallup (June 8, 2021), https://news.gallup.com/poll/350486/record-high-support-same-sex-marriage.aspx.