Estate and Financial Planning Considerations for LGBTQ+ Couples

Estate and Financial Planning Considerations for LGBTQ+ Couples

June 09, 2022
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Even though same-sex marriage has been legal in the U.S. for about seven years, LGBTQ+ couples still face a few extra hurdles regarding estate planning. From family squabbles to establishing legal parenthood, here are a few considerations when developing an estate plan with your significant other.

Avoiding Probate

Even if you have a thoroughly drafted will, it may be wise to avoid the probate process as much as possible.1

Here are a few reasons:

  • Probate is a public process. This process reveals information about your assets, debts, and beneficiaries to anyone who wishes to look up your court case.
  • Probate takes time. Accounts that transfer directly to the beneficiary, avoiding probate, may be available in just a day or two. Going through the probate process may take months or years if there is a dispute.
  • Probate may be expensive. Legal fees may mount up if anyone contests a provision of your will.

Avoiding probate might be as simple as adding your spouse or significant other as a beneficiary on any life insurance or retirement accounts; creating a living trust; or ensuring that your spouse is a joint owner of all assets. Jointly owned assets and life insurance policies that have your spouse as a beneficiary should transfer to your spouse upon your death with no probate needed.

There is one important caveat here: check your beneficiaries! Suppose you have an old life insurance policy or a retirement account that you never converted into a new one. In that case, you may find that those you named as beneficiaries on those accounts may have changed.

Unfortunately, even having a signed will that leaves everything to your spouse may not be enough to invalidate a non-probate account that names someone else as a beneficiary.

Consider No-Contest Clauses

Even if your family gets along well with your spouse now, death may change things. If you believe there is a chance that there might be a family conflict over your assets, it may be worth including a no-contest clause in your will or trust.2 These clauses provide that if anyone brings a legal challenge to your will or trust's validity and loses this challenge, they are entirely disinherited.

Not all states enforce no-contest clauses equally, so it is important to discuss this with an estate planning attorney before adding such a clause to your will.

Considerations for Your Children

Even after the historic Obergefell decision, same-sex parenting presents special legal challenges.3 If one spouse gives birth to a child, parentage is not automatic in some states—the other spouse may need to petition to adopt this child to become their legal parent. And if a child is born via surrogacy or is adopted, this may present some additional legal wrinkles.

Estate plans for same-sex couples with children may need to define who inherits what from whom specifically. A good estate plan also names a guardian for any minor children if you and your spouse pass away before your youngest child turns 18.

 

Footnotes

1 https://www.legalzoom.com/articles/the-top-three-ways-to-avoid-probate

2 https://www.law.cornell.edu/wex/no-contest_clause

https://en.wikipedia.org/wiki/Obergefell_v._Hodges

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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