Six years ago, in Obergefell v. Hodges, the United States Supreme Court gave all Americans marriage rights. A year ago, the Supreme Court decided on equal employment protections for the gay and transgender community. These decisions have not eliminated every complication from the financial planning problems that LGBTQ+ couples face, especially if the couple is not married.
One major problem is that while federal protections have been put in place, not every state has equal benefits or has created anti-discrimination laws to access credit, housing, or even health care. There are also persistent problems with parental rights, adoption, and custody that are also not equal from state to state.
There is good news for unmarried couples, by using all or a combination of the following tools makes it possible for your wishes to be made clear in advance, and many of the problems that plague unmarried couples can be solved.
Wills, a will is crucial if you are unmarried and have assets with no assignable beneficiaries, they may include a personal residence that you want your partner to live in after your death or even assets that you want your partner to have. States by state, the laws are different, so using a will makes it clear where you want your property and assets to go.
Trusts, avoiding probate, and protecting the privacy of your heirs are essential factors in using a trust and indicating the timing clearly and to whom assets should be distributed.
Power of Attorney, on the financial front, having a properly executed document allows your designated person the ability to step in and make financial decisions on your behalf when you are not able to.
Medical Directives, also known as living wills, health care proxies, and medical powers of attorney, are an essential step in preserving your right to have your significant other make medical decisions for you. If one is not in place, they will likely not be afforded “next-of-kin” status, and in a medical emergency, they would probably be bypassed by a family member even if you are not close to them.
Titling, another tool to direct your personal property, including your home, for example, a house titled “Joint Tenants with Rights of Survivorship,” will pass to the surviving owner when one of the owners dies. Absent another owner, the property will pass according to your will or other instruments, and if nothing has been done, they will go through probate and pass according to your state’s laws, which may be opposite your intentions.
Beneficiary Designations for retirement accounts, life insurance, investment, and bank accounts take precedence over wills and other instructions, so ensuring you have them correctly made and they reflect your current wishes is important.
Custody, State laws vary regarding parenting rights, and it is vital to protect the rights of children and non-biological parents. Some states require adoption procedures to accomplish this. Caring for children is expensive, especially when fertility treatments, adoption, or surrogacy is involved. However, the emotional toll of caring for a non-biological child most of their lives and then having a breakup in a relationship cause the loss of contact with the child could be heartbreaking for both. The more you can agree on beforehand, the better off the family will end up.
Domestic Partnership Agreements, unmarried couples typically have no legal protection for assets if the couple breaks up. Having a domestic partnership or cohabitation agreement or separation plan helps define financial expectations in an ongoing relationship. It includes how assets are to be divided if a breakup occurs. However, not all states are on board with these types of agreements. There can also be adverse tax consequences or even gift taxes that are created.
Taking time to understand how your decisions may affect your taxes and financial plans is an essential step for any couple. Talking to someone who understands the complex problems unmarried couples face and is qualified to help you navigate them is very important. These tools are not the end, but they are certainly good places to get the conversation started.
Thanks for reading this article. If you want to know more or have questions reach out to us at www.bmgadvisors.com.
Everyone has a story. Some take the time to plan for it. At BMG Advisors, we work to help you plan your financial goals and help your story come to life.
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Please consult your tax and legal advisor regarding your specific situation.