Equal Marriage Rights Affects Estate Planning for LGBT Clients
Federal Law Compliance
The SAGE (Services and Advocacy for Gay, Lesbian, Bisexual, and Transgender Elders) website has a very useful "Talk Before You Walk" section for those considering marriage. It discusses in detail the ways in which marriage can affect financial and legal issues for both LGBT elders and those who are under 65.
The ruling will affect Social Security benefits, Supplemental Security Income, Medicare, Medicaid, Spousal Impoverishment Protections in case a spouse needs to move to a nursing home or long-term care facility, veterans benefits, income and estate taxes, and immigration. All of these issues can have estate planning ramifications.
If a client already has designations that work around previous laws to include his or her partner in estate plans, those estate plans should be reexamined if the couple is now considering marriage. Any time clients have a significant life change, those estate plans should be revisited and modified to reflect the new situation. The legal designation of "spouse" will necessitate a change in the language of many of the documents that some of these LGBT clients already have in place.
In addition, those who are creating an estate plan that includes a spouse for the first time may not have considered the ways in which marriage will affect some of these crucial issues. Many, believing in the past that marriage was not an option open to them, may not be aware of the federal laws that govern these federal programs or legal requirements. It is our responsibility as advisors to inform clients and help make sure their planning is written in accordance with federal laws.
Retirement Beneficiary Designation
LGBT clients should also revisit their retirement beneficiary designations should they be considering marriage in light of the Supreme Court ruling. Employee beneficiary designations and IRA and 401(k) beneficiary designations should be updated if a client marries. Though a client may have designated a partner for these plans in the past, marriage will necessitate a change in the wording of the designation to spouse, and clients should not assume that their current designation will be in accordance with the laws governing these documents.
In states which previously disallowed gay marriage, employers were not legally required to provide spousal benefits for same-sex couples whose marriages were officiated in other states. Since the Supreme Court ruling, however, they must provide equal spousal coverage for all married couples, and therefore these documents should be revisited and updated in light of this change.
Health Care and Medical Power of Attorney Documents
Equal marriage rights also affects health care and medical power of attorney designations. Clients should also review these documents. Whether they're walking down the aisle or have previously done so and their marriage is only now legally recognized in the state where they reside, these designations should be revised or written to reflect that legal change. In the past, many same-sex couples may have had to write very specific instructions permitting their partners the right to make medical decisions or to have durable medical power of attorney should they become incapacitated. However, those documents will need to be updated to reflect the partner as spouse in order to fit within the law.
The Supreme Court ruling has wide-ranging effects on estate planning issues, and it is important not only that we stay abreast of the legal ramifications for our clients but that we reach out to them to ensure that their estate planning documents reflect the current law.
We hope this information was useful to you and helps you and your families. If you have a specific case or a question, don't hesitate to call our office at 919-443-3035.