Estate Planning for LGBT Couples

In 2015 when the Court decided the landmark case, Obergefell v. Hodges, which held that the Due Process Clause of the Fourteenth Amendment guarantees same-sex couples the right to marry and these marriages must be recognized nationwide. In addition to its obvious implications for same sex marriages, Obergefell also created a ripple effect into other areas such as estate planning creating.

Posted on July 29, 2016

The Obergefell decision prompted significant changes in the legal status of same-sex couples in a number of areas including the recognition of same-sex spouses for taxation purposes and passing on benefits; one should not assume that estate planning for same-sex couples requires an entirely different approach. Rather, estate planning for same-sex couples adheres to some of the same fundamental principles that would apply to any other estate plan. These principles include minimizing tax exposure; avoiding probate (when possible); and providing asset protection for beneficiaries. Nonetheless, same-sex couples should be mindful of a few estate-planning considerations that are unique to their situation.

Although Obergefell settled the issue of the legal status of same-sex marriage, many laws which affect estate plans have not caught up with this change, thereby leaving gaps and ambiguity for same-sex couples in a number of areas pertinent to estate planning. However, it is important to note that, given this decision, states may not pass or leave laws on the books, which treat same-sex couples in a manner that is different from other married couples. Therefore, any gaps or ambiguities in the law are the product of the fact that courts have likely never had the opportunity to address estate planning related legal questions as they apply to same-sex couples requiring courts to create new legal standards on questions that cannot be addressed by existing case law. Given the Obergefell decision and our experience with other cases of changes in estate planning law, courts will likely just retrofit the questions raised by same sex couples to existing case law and find a practical solution to unique questions presented by estate planning by same-sex couples. However, there is the possibility that unique situations can arise that cannot be addressed by previous case law. Therefore, courts will need to devise unique solutions to these questions as they arise, which from an estate planning perspective can present problems, as uncertainty in the law can make estate planning difficult. In the interim, same-sex couples should be mindful of creating an airtight estate plan that will keep their estate out of probate court and the uncertainty and extra cost that could be created when a court must use its discretion to carry out estate distribution. Therefore, in light of these considerations, same-sex couples should leave as little to interpretation as possible when creating an estate plan. Thus, same-sex couples and their families are encouraged to take steps whenever possible to avoid the probate process through the use of trusts and other probate avoiding measures that offer a greater amount of control to planners as to how estate assets will be distributed. If assets cannot be transferred out the probate process, make certain that the distributive intent is clear in a will so that nothing is left to interpretation. Whatever the situation the most important consideration rests in the most effective way to adhere to the fundamental principles of estate planning while adhering to the wishes of the estate.

Counsel experienced in estate planning, specifically for same-sex couples can assist in asset preservation strategies.

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