LGBTQ+ Estate Planning to Protect Yourself and Your Loved Ones

The Importance of LGBTQ+ Estate Planning

Estate planning is for everyone. Regardless of your wealth, age, marital status, gender identity, or sexual orientation, it is crucial to have a plan in place to protect your money, property, and loved ones in the event of an accident, illness, or death. For LGBTQ+ Americans, estate planning can be even more important. Despite same-sex marriages being legally recognized since 2015, couples composed of sexual and gender minorities still face estate planning challenges not encountered by other “traditional” same-sex couples. Issues such as unaccepting family members, child adoption by nonbiological parents, and LGBTQ+ couples living together unmarried underscore the need for proper LGBTQ+ estate planning documentation.

Without a plan, you and your family could be subject to your state’s default or intestate succession law, which may not take into account LGBTQ+ couples’ realities, families, and dynamics. And if your plan was created before 2015, you may need to revise it to ensure that it reflects the latest legal rights granted to married same-sex couples.

First Census Data on the LGBTQ+ Community

In the 2020 census, the US Census Bureau asked Americans about their gender identity and sexual orientation for the first time. Its findings finally shed some light on matters that include the number of same-sex couples living together and the current percentage of Americans who identify as LGBTQ+.

According to the Census Bureau, 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.^[1]

The Census Bureau notes that same-sex couples are more likely than opposite-sex couples to be unmarried.^[2] Overall, same-sex married couples currently account for approximately 1 percent of US married-couple households.^[3] Census Bureau data also indicate that although the vast majority of American adults—more than 88 percent—identify as straight, 4.4 percent identify as bisexual and 3.3 percent identify as gay or lesbian.^[4]

Research by the Gay and Lesbian Alliance Against Defamation has found that younger people are significantly more likely to identify as LGBTQ than members of older generations.^[5] Among the US population as a whole, 12 percent of adults identify as LGBTQ, but 20 percent of millennials identify as LGBTQ—nearly three times the number of baby boomers.^[6]

Key Steps in LGBTQ+ Estate Planning

The word estate can be misleading. While it may bring to mind a large, gated, and meticulously landscaped country home and grounds, legally speaking, an estate is simply all of the money and property a person owns.

Your estate is everything you have accumulated during your lifetime. It comprises not only of your physical property, such as homes, vehicles, and collectibles, but also financial assets such as bank accounts, investments, and business interests. Your estate also includes any outstanding debts.

Your estate plan is a written declaration of how you want your money and property to be distributed when you pass away. An estate plan also details your wishes for what should happen if you become too ill or incapacitated to make personal decisions. With these points in mind, the following is a quick overview of basic estate planning documents that everyone should have:

Will: A last will and testament is a cornerstone estate planning document. It details how your property and money are to be distributed following your death and who should be in charge of the distribution process (your estate’s executor or personal representative). It also names a guardian for your minor children if the other parent dies before or at the same time as you. If you do not express your wishes in a will, the state’s intestate succession law will apply.
Trusts: Probate is the process of taking inventory of all of your accounts and property, paying off your debts, and then distributing the money and property to your named beneficiaries. A trust is a legal instrument that allows another person to hold and manage your accounts and property for somebody else’s Accounts and property owned by the trust or distributed to the trust through a beneficiary designation can avoid probate and, in some instances, estate taxes. For example, instead of leaving money directly to your child, you can place it in a trust and have somebody manage it for them until they reach a certain age. Many types of trusts can be incorporated into an estate plan.
Living will or advance directive: A living will or advance directive explains the types of end-of-life treatment you want—and do not want—such as being kept alive by a respirator. It takes effect when you are too ill or incapacitated to communicate your wishes in this regard.
Powers of attorney: A power of attorney authorizes another person to make legal decisions on your behalf. In a healthcare power of attorney, you can designate somebody to make medical decisions for you if you become too ill or incapacitated. Similarly, a financial power of attorney lets someone else manage your finances when illness or injury prevents you from doing so.
Beneficiary forms: Beneficiary forms allow you to specify who should collect the money from your insurance policy or retirement accounts when you die. Beneficiary forms can override your will, so they should reflect your current intent. Otherwise, a former partner or spouse whom you previously named on a beneficiary form could cash in on your 401(k), IRA, or life insurance policy.

What Happens When You Do Not Have an Estate Plan

Entrepreneur, author, and motivational speaker Jim Rohn said, “If you don’t design your own life plan, chances are you’ll fall into someone else’s plan.”

Something similar could be said about estate planning. If you do not create your own plan, the state will decide what happens to your money and property according to its intestate succession law. This principle applies to everyone, but for the LGBTQ+ community, there are a few factors that could make the state’s intestate succession plan even more undesirable.

If you are married, your spouse may or may not receive everything, depending on your state’s laws. If you are single, your money and property could go to a family member who do not support your sexual orientation or gender identity and with whom you may have fallen out.

The same applies to people you name as trusted decision makers, such as your agent under a financial or medical power of attorney. Even if you are married, your spouse does not have the unilateral right to make financial and medical decisions for you. Without a detailed estate plan, your spouse, who might have priority, could end up having to go to court to get these legal powers. And if you are single, the court could appoint a family member to make these decisions for you, even if you are estranged from them.

For LGBTQ+ couples with children, the situation can be particularly complicated. One, or neither, partner could be the biological parent. The couple may have used an egg or sperm donor or a surrogate mother to conceive the child. It is important to consult state laws on parental rights, but the biological parents’ legal rights usually have priority. A court order, such as an adoption, can shore up LGBTQ+ parents’ rights. But if the biological parent dies without a will, their biological family—not their spouse or partner—could receive custody if their spouse or partner is not legally recognized as a parent.

Update Estate Plans Regularly

LGBTQ+ individuals can appreciate that the social and legal landscape can change quickly. Gallup polling indicates that since 1996, support for gay marriage has increased from 26 percent to 70 percent.^[7]

Prior to the 2015 Supreme Court ruling in Obergefell v. Hodges, couples may have pursued such legal arrangements as civil unions and domestic partnerships in lieu of marriage. These arrangements can affect your current estate plan because previously recognized relationships that have not been reversed can give past partners a legal interest in your estate. In addition, your estate planning documents should contain terms (e.g., husband, wife, or spouse) consistent with today’s marriage laws.

Beyond considerations specific to LGBTQ+ estate planning, your estate plan should reflect your current life and wishes. If you have acquired new property, received an inheritance, or experienced another major life event, update your plan accordingly. Estate planning attorneys often recommend updating a plan every few years to account for changes.

We Are Here to Help

Whatever your sexual orientation or gender identity, it is critical to have an estate plan that gives you control over what happens when you are no longer around. At McDonald Law Firm, we are committed to creating a plan that is unique to your needs. For questions about LGBTQ+ estate planning or to get started on your plan, contact Andre O. McDonald, a knowledgeable Howard County, Montgomery County and District of Columbia estate planning, special-needs planning and Medicaid planning attorney, at (443) 741-1088; (301) 941-7809 or (202) 640-2133, to schedule an appointment.

DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL, INSURANCE OR TAX ADVICE.

^[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 Household 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 Millennials 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.