Estate Planning Update for LGBTQ+ Families

This update is a companion and supplement to our more comprehensive Guide for Non-Traditional Families and specifically updates some items relating to LGBTQ+ individuals and families. Even with marriage equality being the law of the land in the United States, there are still some pitfalls for same sex families when preparing their estate plan. And, as state and federal laws change and conservative groups attempt to overturn marriage equality laws and limit basic human rights held by LGBTQ+ individuals and families, strong estate planning is now more important than ever. Read the guide here.

Planning for Incapacity

Healthcare Agent:

Planning for incapacity is something that we should all consider. It is important that the person who you appoint as your health care agent knows your preferences, but in the case of LGBTQ+ individuals, the principal needs to make sure that the agent understands their lifestyle and medical choices – and would support and carry out those wishes even when the principal is incapacitated. If you do not plan ahead by having a North Carolina licensed attorney prepare your Health Care Power of Attorney document, you leave yourself at the mercy of the state laws, namely N.C.G.S. 35A-1214 and §32C-1-108 relating to legal guardianships and N.C.G.S. §90-21.13 regarding informed consent. Under N.C.G.S. 35A, the Court has the power to appoint a guardian over your person and/or your estate when you can no longer make your own health care decisions. The Court will honor the most recent health care agent appointment as your preferred legal guardian of the person. However, if you have not appointed someone under a valid Health Care Power of Attorney document, the Court will appoint someone who may not be sympathetic or agreeable to your specific health care needs and goals – such as hormone therapy or other gender affirming care. If you have family members who are hostile to your lifestyle, you can specifically name them and mandate that they are excluded from consideration as your legal guardian if you become incapacitated.

Your health care agent is charged with handling the final disposition of your remains, and will be in charge of handling your funeral arrangements. You should leave very clear directions to your health care agent about how and where you want your funeral to occur and also how you want your body to be presented and handled after your death.

Financial Agent:

For the same reasons mentioned above, you should also have your General Durable Power of Attorney in place so that someone you trust will be able to handle your financial and legal affairs should you become incapacitated – either temporarily or permanently. Again, you can specifically exclude family members who are hostile or not supportive of your lifestyle or who do not share your values. This notion applies to everyone and is not limited to LGBTQ+ individuals. If you want to make provisions for your life partner, if you remain unmarried, those items should be included in your General Durable Power of Attorney as well as in your Last Will and Testament and/or trust planning documents. Specifically, you can set out rules saying that your partner has the right to live in your house and use your resources as needed. This advice also applies to heterosexual unmarried couples.

Intestate Succession/Last Will & Testament

If you do not make a Last Will and Testament during your lifetime, your assets will be distributed according to state laws. In North Carolina, that process and framework is called intestate succession and can be found in N.C.G.S. Chapter 29. It is important to note that your spouse does not automatically inherit all of your assets if you die without a valid will. It is even more important to have your Last Will and Testament in place if you live in a state with hostility towards marriage equality. As you are preparing your estate plan, the attorney will perform research and ask questions about how your assets are currently titled in order for you to make an effective plan for the disposition of those assets upon your death.

This is a good time for a reminder NOT to use forms for wills that you may find online or via free resources. A will is a complex legal document that should always be drafted by and reviewed by an attorney licensed in your state.

If you are married, real property held as tenants by the entirety passes directly to the surviving spouse upon the death of one spouse. You may also designate payable on death beneficiaries to your financial and investment accounts to avoid probate and avoid undesired family members from sharing in a portion of your estate.

If you do not have a will, someone in your family could qualify to be in charge of your estate and this can cause upheaval and uncertainty to your surviving spouse and your children.

Revocable Living Trusts:

Trust planning can also be helpful for LGBTQ+ individuals and families. Trusts are private documents that help you avoid probate and to name a trusted person to be in charge of your assets upon your incapacity or your death. Some scenarios where a revocable living trust can be useful are when you have out of state property and want to avoid probate; you have assets that are difficult to value or own a business; or to further address your wishes in the event of your incapacity. If you become incapacitated, the trust should dictate that your chosen successor trustee can immediately take over and make decisions and control and protect your assets.

One important aspect of trust planning is to be sure your trust is funded properly and that assets are transferred into the name of the trust. For example, real property must be transferred into a trust by a deed. All trust planning should be accompanied by a Pour Over Will that serves as a catch-all to pour over any assets not already put into the trust during your lifetime, they will be “poured over” or pass into the trust after your death per the instructions in that companion will document.

Marriage Considerations

In any marriage, there are pros and cons to consider when entering into a marriage contract. Before marriage equality was legal in all 50 states in the United States, some marriages and/or divorces between LGBTQ+ individuals were not done properly and have led to litigation and complications when the parties attempt to get remarried at a later date. If the former marriage or civil union was not properly severed by a legal divorce, and a party attempts to marry again – the second marriage could be void as bigamy.

There are also financial considerations for those contemplating marriage such as income tax and social security benefits. These are items to discuss not only with your estate planning attorney, but also your CPA. North Carolina also still has an antiquated rule called the Doctrine of Necessaries that holds a surviving spouse financially liable for all medical bills of their spouse. This cannot be contracted away in prenuptial agreement. So, if you are considering marrying someone with a chronic illness, be prepared to be responsible for all of their medical bills when they die. There is an exception to this doctrine, if the medical provider had actual notice that the parties were separated at the time of treatment of the ill spouse.

Parenting Considerations

There are some considerations for parenting that should be considered by LGBTQ+ parents. The non-biological parent should always obtain an adoption decree to be sure to be protected and to be legally recognized as the child’s parent. A birth certificate is only a presumption of parentage – only the adoption decree has the force of a court order. Some states will not recognize a voluntary affidavit of parentage or co-parenting agreements, especially when it comes to emergency medical care of a minor child. Another safeguard is to have a written consent for medical treatment of a minor child if that child is traveling with the non-biological parent.

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