Estate Planning: Ensuring a Happy Ending

One of the big differences in financial planning for LGBTQ+ people is estate planning. There are a lot of unique planning considerations. 

Why is it more important for LGBTQ+ individuals to have essential legal documents in place? Here are four key reasons …

1. 2x more likely to be single and age alone
2. 8 in 10 feel they won’t have enough support as they age
3. 85% of older LGBTQ+ adults are concerned about discrimination
4. Only 49% of LGBTQ+ individuals have a will, compared to 68% of the general population.

So we're going to discuss the essential legal documents, such as …

• Wills
• Trusts
• Power of attorney
• Advanced healthcare directives

Power of Attorney

One of the key documents for us is a power of attorney. This means even if you're legally married, we still have to have a power of attorney that you need for your spouse. This gives the person that you name the ability to make decisions for you, maybe to access accounts or to get medical care.

Wills & Trusts

You may want a will. They aren't always probated, but a will is where you go ahead and you name who's going to receive what when you're gone. 

You can also do that through a trust. A revocable living trust is very common. And what that means is you can set things up in a trust to avoid probate. And if it's a revocable living trust, it's a pass-through trust using your own Social Security number. 

Advanced Healthcare Directives

Advanced healthcare directives, such as a living will or a medical power of attorney. A "living will" is a strange name. But it's the “pull the plug” document. 

Until you've gone through it, you don't know how important those documents can be. I've been through it with my own family and my brother to make those decisions. 

Do we pull the plug?

Is there a feeding tube? 

Is there a ventilator? 

Beneficiaries & Titling

Another key thing is that to make sure that your beneficiaries are up to date, people don't always think of this, they think that it's up to date, you need to double check it, you may think you've got a spousal benefit, when I'm married, it's going to go to my husband or my wife, that is not the case. If you've got somebody else listed, it could be an ex-spouse, it could be if nobody's listed, it goes to your estate. 

Proper titling of accounts is essential. Often, there is a liquidity problem after someone passes away and all assets are tied up in the estate.

If you have these accounts titled properly, money can be transferred pretty quickly. It gets to be very technical, and the laws keep changing—particularly on IRAs or retirement accounts. It used to be that you could stretch out the required minimum distributions over a lifetime. Now, if it's a non-spouse beneficiary, they have to be liquidated over 10 years. 

This is a key difference for spouses and non-spouses. If you are legally married, your spouse has the right to your IRA, to receive it as though it were always his or her own. That's a key marital benefit. 

Guardianship

What can happen if you don't have a power of attorney? You can end up being the victim of a guardianship. I say victim because this seldom seems to work out well. 

If nobody has the right to make decisions for you and you can't make decisions for yourself, there may be a petition for guardianship. The Court steps in and will appoint someone. It could be a hostile relative who seeks this. This is a danger for LGBTQ+ people. It could be that you've got a mother who wants to take away a son from a same sex partner. And when that happens, the court gives the rights to that guardian. And that includes the right to move you to where you live. 

It can be dehumanizing. The court will take away your rights and appoint them to a guardian. It can also be very expensive, not just for the guardian services, but also legal fees. 

You want to make sure that you've got that power of attorney because the courts typically look for the least restrictive alternative. And they will go ahead and honor a power of attorney, rather than appoint somebody else. 

There's one other document, you can get a pre-need guardian, where you name someone to be your guardian if necessary. However, if you have a power of attorney, you don't need that, assuming that the power of attorney is still available and willing.

When I have a person comes in, or a couple, a gay person, gay couple, I will ask them …

Is there anybody in the family who might cause trouble if one of you becomes disabled or passes away? 

The answer is frequently yes. 

This is the main reason for ensuring your wishes and documents to avoid it. I'm not an attorney, and I don't do these documents—but part of my fiduciary duty to you is to make sure that those are done. 

Also, I often get asked … 

Do you know a good accountant or a good estate planning attorney? 

When I give them some names of some people I work with the next question is very commonly …

Are they part of “our community? Or are they gay friendly? 

I'm always going to recommend somebody who I know is culturally competent, either part of the community or an ally. Frequently, my best referral partners are not other gay people. But they're allies who have a lot of experience with LGBTQ+ clients. 

Think about that question. They would not ask that question if it didn't matter. People want to know that they're going to be working with somebody who is either LGBTQ+ or LGBTQ+-friendly, that they're not going to have to go back into the closets, nobody's going to raise their eyebrows, or ask stupid questions or just not be experienced. 

Here’s The Tea: Cheap Will Cost You

A client downloaded a will document from the internet and completed it. When he passed away, his executor called. He said, Well, what do I do now? I'm the executor of the estate. I said, Well, you have to go to court, you have to present the will, the judge has to sign off on it that you are eligible to be the executor. And then you get letters of administration. And then you take those to the custodians of the accounts. 

So right away he says, "Whoa, I need an attorney". I stated, "Yes you do!"

If his friend had created his will through an attorney, there would be someone to assist him with all of these tasks. 

It turned out, he did not even have the right to claim the body and the person next in line to claim the body was in jail. So again, we had to get the attorney involved to handle that. 

Ask yourself when you're talking about assigning a power of attorney or mapping out your entire estate planning …

Is this really important? 

Will this cost a lot of money? 

The answer is yes. It's worth spending the money on a good estate planning attorney who will do this for you so documents are not going to be challenged. Or, if they are challenged, having an attorney involved ensures that it fails.

Any estate planning attorney is going to have horror stories of where documents were not done properly or people come out of the woodwork to cause trouble. This is why LGBTQ+ people need to work with an LGBTQ+ allied estate planning attorney. 

Additional Resources:

Why I Wrote a Guide to Funeral Planning for Queer People (by Ash Hayhurst for Ceremony Matters)

The Conversation Project: Helping People Talk About Their End-of-Life Wishes

Aging In Pages Bookshop: Date with Death Club