GLBT Planning

Summary:
Planning if you’re Gay, Lesbian, bi-sexual and transgender have many special planning
considerations, only the most obvious being the lack of a marital deduction for
federal gift and estate tax purposes. Consider the following:

√Act Now. Doing nothing, which is the un-plan
most folks opt for really just won’t do. Without your taking specific actions
your partner won’t have the right to inherit your assets, raise your children,
or other things married couples can count on. If you’re GLBT and single,
planning is just as important to assure your financial and legal security
through illness and aging.

√Standard Forms. These won’t address your unique needs.
If you cannot get forms that are tailored to your situation they won’t work.
Yes, tailored forms cost more, but a custom made shirt will fit better than an
off the rack one from GAP.

√ Plan. You need planning first, forms second.
What personal goals do you have? What tax and financial issues do you face. You
have to first delineate your unique circumstances and goals before attempting
to create documents.

√ Rules. Understand the rules, if any, your
states has that may govern your relationship. Does your state have a domestic
partnership, civil union, or same-sex marriage statute? What does it provide? Do
the benefits of moving to a state that has more favorable law outweigh the
negative impacts (job loss, costs of move, etc.)?  Regardless of state law the federal Defense
of Marriage Act will prevent you from obtaining federal tax treatment
comparable to a married couple.

√ Get Real. You need to honestly assess your
situation, not a hypothetical or idealized situation and communicate it clearly
to the professionals you are working with. How does your family and others deal
with your lifestyle choice? What type of safety net and support do you have in
the event of illness? Is your family really going to be cooperative with your
partner if you are ill or die? Remember difficult times bring out tough
emotions so what might be OK now may not be if a traumatic event occurs.

√ Contract. Use a living together or other
contractual agreements to bolster and corroborate the decisions set forth in
your will in case family or others seek to challenge your plans. A well crafted
living together agreement can also minimize the difficulties if your
relationship with a significant other terminates. You will not have the
benefits of state law that govern the dissolution of marriage, so a contractual
arrangement is important to fill in those and other gaps.

√ Hostile Family. Take extra steps to fend off a
potential future challenge by hostile family members. Revise documents
periodically to create a history confirming your wishes. Consider inter-vivos
gifts to those you name as heirs to establish a pattern.

√ Trustee. Consider the benefits of using an
institutional trustee in your documents. They are not subject to the emotional
whims or issue that a family member or friend may be. They can provide the
objective and professionalism you may need.

√ Agent. Carefully evaluate who you would give
the power to handle your financial matters if you are too ill.  Read carefully the document that will be
used, you may not really want or need a broad general power that gives your agent
every conceivable power over your assets. A more restrictive durable power of
attorney may be preferable.  The best
approach for many is a living trust with an independent or institutional
trustee as the primary tool for disposing of your assets in the event of a
problem.

√  Health.
Be sure to clearly indicate your wishes in your living will and health proxy.
Address religious considerations specifically (what you do and what you don’t
want). If you have a partner specifically mention that your partner is your
agent and that you want your partner to have all the same rights and privileges
afforded to a spouse. For example, if you want your partner to be afforded the
same visitation rights as a spouse if you are hospitalized, state that clearly
in the documents.  If you have any
particular health issue address it clearly what it means in your documents,
again standard form language can miss what is really important to you.

√ Tax. With
the federal estate tax potentially returning with a $1 million exemption next
year, plan to minimize estate taxes on transfers to your partner. This is
challenging without the benefit of an unlimited marital deduction. Inter-vivos
gift planning, life insurance planning and other techniques need to be
employed.