Same-sex couples need to plan for what will happen if a partner becomes mentally incapacitated or dies. Some important things to at least consider:
- Financial and Healthcare Powers of Attorney. Without financial and healthcare powers of attorney in place, blood relatives, not your partner, will take charge of your healthcare decisions and finances in the event you become mentally incapacitated.
- Cohabitation Agreement. This is like a prenuptial agreement. For a couple whose "marriage" will not be recognized under state and/or federal law, this type of agreement could create contractual rights similar to those granted to opposite sex married couples.
- Last Will and Testament and Revocable Living Trust. Without a Will or Revocable Living Trust, your relatives, not your partner, will take over your estate after your death. This means that your property will not be left to your partner.
- Property Ownership. You should consider how your property is owned. You may want to consider joint ownership, but watch out for gift tax issues. Joint ownership with right of survivorship will avoid guardianship if a partner becomes menatally incapacitated. Joint ownership will also avoid probate after a partner dies. However unlike married couples, unwed couples cannot take advantage of unlimited gifting. This means there could be gift tax consequences if joint ownership is created.
- Provide for Surviving Partner. Life insurance is one way to leave cash to the survivor to pay bills and replace income. You should also make sure that the beneficiary designations for your 401(k)s and IRAs are up to date so that your partner is named as the primary beneficiary.
For more information on estate planning for same-sex couples, please contact us and ask for our brochure, "Understanding the Basics of Estate Planning for Same-Sex Couples."