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In the 2015 Obergefell v. Hodges decision, the United States Supreme Court upheld the right of same-sex couples to marry in all 50 states. This brought marriage equality to same-sex couples, no matter in what state they reside. Since then, same-sex married couples have been able to do their estate planning just as heterosexual couples.
Estate planning is something that must be revisited intermittently and carefully reviewed, particularly with same-sex couples. Challenges remain for same-sex couples who entered into legal unions, domestic partnerships, or other civil unions prior to marriage being an option for them.
Before marriage was recognized, life partners could leave each other whatever portion they wished to, or nothing at all. But now, a surviving spouse (whether heterosexual or same-sex) is statutorily entitled to a percentage of the deceased spouse’s estate.
Something also to consider are pre-2015 marriages in states that recognized those marriages. What happens if those couples separated but never dissolved their marriage? Or, what if a registered domestic partnership or civil union can be or was converted to a legal marriage (such as in the state of Washington, where registered domestic partnership arrangements were automatically converted to legal marriages for those under the age of 62)? What if you are not legally married to your partner and you die intestate? Your partner would not inherit under Florida law!
All legal benefits for same-sex couples who choose to marry can avail themselves to a previously-unavailable estate planning world: inheritance through intestacy, custody rights for children of the marriage, joint tax filings, pension and other retirement plans, and priority in guardianship proceedings. At the very least, all couples should have a will and appropriate advanced directives. Trusts can also be established to help avoid probate, and potential litigation.
While married couples can choose different forms of real property ownership, they are exclusively eligible for a designation called “tenancy by the entireties”: each spouse owns a 100% interest in the real property, and when one spouse dies, the other spouse immediately receives title to the entire property without the need for probate or intestate succession. This type of ownership was previously unavailable for same-sex couples.
Gift tax considerations also are available for same-sex married couples, which previously was not an option. Married spouses are also allowed portability, meaning that if one spouse dies, the other gets to rollover the unused portion of their spouse’s lifetime exclusion amount (which in 2019 is $11.4 million).
Another consideration to be made in estate planning involves children with same-sex parents. Adoption may need to be part of the estate plan, such that the couple’s assets would be inherited by their children rather than some other family members.
Beneficiaries of life insurance policies, retirement accounts, and bank accounts, even to assure these have named beneficiaries that match up with the couple’s wishes, should also be reviewed and updated. Retirement accounts are even more particular: under federal law, a spouse is the automatic beneficiary of a 401K account, unless he or she waives that right. But if the account is opened pre-marriage, it may lack the spousal waiver, and may go to other named beneficiaries. These beneficiary designations pass outside of probate, so it is imperative to review these as well.
Some additional considerations for same-sex couples and their planning include social security benefits and military and veteran’s benefits.
All non-married couples, blended families, and other domestic types of partnerships, whether heterosexual or same-sex, present different issues and considerations. An experienced estate and trust lawyer can provide a fresh, unique, and inventive perspective and create an estate plan that works for your family situation.