Everyone needs an estate plan—regardless of whether you have significant property, savings or other investments. An estate plan is a tool to help ensure your financial matters are settled and your wishes will be carried out upon your death.
Due to the limited legal protections, discrimination and prejudice that still exist, LGBTQIA+ individuals often face unique challenges when it comes to estate planning. Here, we'll explore why estate planning is so important for LGBTQIA+ people, what they need to consider and how to plan for the future.
Why is Estate Planning Essential for the LGBTQIA+ Community?
This type of planning entails specific financial and legal considerations for the LGBTQIA+ community:
- • Research suggests that two in three LGBTQIA+ people in the U.S. live paycheck to paycheck, and that they know less than their straight counterparts about retirement planning, estate planning and stock market investing.1
- • Marriage confers certain automatic legal rights and financial benefits to spouses—for example, a spouse can pass an unlimited amount of assets to their surviving spouse without paying federal estate or gift taxes.2 Yet just 9.6% of LGBT adults are in a same-sex marriage, while 7.1% live with a same-sex partner and 50.5% have never married.3 As a result, unmarried same-sex partners are particularly vulnerable if their partner dies without a will or estate plan. Even married same-sex couples with children are wise to keep their legal papers in order, especially if they become estranged from their families of origin.
- • For LGBTQIA+ couples with children, the stakes are even higher. They should consider obtaining legal paperwork to validate their parental rights and ensure they can provide for their children in the event they become incapacitated or die.
Given that the landmark Supreme Court marriage equality decision is less than a decade old and that LGBTQIA+ people still lack federal workplace and parenting protections, this remains an unsettled and evolving part of the law—adding even more importance to estate and financial planning. Here are some key steps for LGBTQIA+ people to take to help ensure their paperwork is in order.
Step 1: Start With the Estate Planning Basics
Whether you're married, in a long-term partnership or single, estate planning can offer a helpful tool to manage your finances and other matters after you die or if you are unable to handle them during your lifetime. At Riverstones Vista Capital , our LGBTQIA+ employees speak from experience and understand the peace of mind that comes from having your paperwork in order. Here are some key estate planning documents they recommend considering:
Legal will
If someone dies without this critical document, the state will prioritize how assets are distributed and—if there are minor children and no other parenting agreements—potentially the custody of any children.4 For LGBTQIA+ people, that could mean that parents, siblings or other relatives could become beneficiaries instead of a life partner if the couple was not legally married. For a single person, that could mean their wishes to provide for close friends or family of choice or to grant bequests to an LGBTQIA+ organization might be ignored. As our employees can attest, having everything spelled out will help prevent an outside influence from overriding your wishes.
Trust
A trust is a legal structure through which a person or entity (called a trustee) manages property or assets held by one party (the trustor) for the benefit of a third party (the beneficiary).5
Depending on the type and size of an estate, as well as personal circumstances, a revocable living trust may be an appropriate planning tool in conjunction with a will. A trust can provide the framework to support a living person who becomes incapacitated and also is distinct from a will in several ways:4
- • A trust is a private document that won't become part of the public record and cannot be contested.
- • A trust can provide a tax-favorable way for unmarried couples to share savings and possessions.
Financial power of attorney
This document authorizes someone else to make financial decisions on your behalf if you're not able to do so or during an emergency.
Medical directive/healthcare power of attorney
These documents allow you to declare your preferences for medical care during an emergency or if you become incapacitated, as well as designate a spouse, partner, family member or friend to make medical decisions on your behalf. These types of directives are especially crucial for an LGBTQIA+ person, should they become estranged from their family of origin or if they have differing views from them on medical care for religious or other reasons, to ensure their wishes are followed.
Step 2: Know Your Rights as an LGBTQIA+ Couple
Although laws about marriage, divorce and probate vary by state, certain federal laws and regulations help ensure that LGBTQIA+ couples can assume basic rights related to estate planning.
The Respect for Marriage Act, which became law in 2022, addresses what would happen if the Supreme Court were to revisit or overturn its 2015 landmark marriage equality ruling, Obergefell v. Hodges. Prior to the Respect for Marriage Act, a reverse of the same-sex marriage ruling would have resulted in those unions being prohibited in most states due to preexisting marriage bans. However, the new law mandates that same-sex marriages performed in states where it is legal be recognized by every state and the federal government.6
Another potential issue for some LGBTQIA+ couples is Social Security survivor benefits.7 Under federal rules, someone denied survivor benefits because they did not meet a marriage requirement being enforced unconstitutionally can petition for an additional review of their claim.8
According to the Social Security Administration, someone may qualify for survivor benefits under these criteria: "You would have been married at the time of your partner's death if unconstitutional state laws hadn't prevented you from doing so" and/or "you would have been married longer if not for unconstitutional state laws that prevented you from marrying earlier."7
Step 3: Make Sure Your Kids Are Protected
For LGBTQIA+ families, documenting the legal parent-child relationship is an important first step toward creating an estate plan that will provide support to your children should one or both parents pass away.9
With LGBTQIA+ families, there are many potential scenarios that add complexity to establishing your legal relationships:
- • One of the parents may be a biological parent—and the one who typically has legal rights—or neither may have biological ties to their child, if a surrogate was used or if the child was adopted.
- • One, both or neither of the LGBTQIA+ parents' names may be listed on the birth certificates.
- If there's more than one child, it's possible that one member of the couple could be the biological parent of one child and the other spouse or partner could be a biological parent to another child.
- The couple may have created their family by using an egg and/or sperm donor, and/or a surrogate to carry the child.
- With adoptive children, a couple may have adopted a child together or—depending on their state or circumstances—it's possible that one parent is the legal adoptee and the other wouldn't have legal parental rights unless the couple filed for a second-parent adoption.10
For these reasons, even being married may not ensure that your wishes for your children are carried out or that one parent would retain guardianship should the other parent become incapacitated or die. What's more, there are no federal rules for parental rights—they vary by state. That's why parents should consider obtaining a court-approved adoption or parentage agreement that spells out the rights of both parents, and draft wills, trusts and other documents that specify inheritances and guardianship for the children.9
Step 4: Factor in Family Dynamics
Do you spend Thanksgiving and other holidays with your family, never miss a birthday party and join in the annual beach trip? Or have you not spoken to your parents or certain family members in years? Maybe your situation is somewhere in between.
Despite changing societal attitudes toward LGBTQIA+ people, many individuals and couples still face difficulties in maintaining relationships with their families of origin after they come out, and may even experience total rejection. This is especially true for people in their 50s and up who have lived most of their lives under threats of harassment and discrimination and without the full protection of the law, and only in recent years have enjoyed significant protections like marriage equality.
As a result, many LGBTQIA+ people may not maintain close contact with their immediate family or may only remain in contact with certain family members, and/or may have formed families of choice with a life partner and friends.
To avoid conflicts after your death, consider adding a no-contest clause to your living will or trust. Under this type of provision, a relative or someone else who petitions a court over whether your will or trust is valid will not receive anything if they lose.11
Tips for Estate Planning
Here are some additional tips to help create and maintain an estate that addresses all your concerns:
- • Don't rely on templates/standardized docs: LGBTQIA+ people should consider hiring a lawyer or financial planner to make sure their estate plan conforms with laws in their state, rather than rely on standardized templates or documents found in online kits.
- • Check if your employer benefits plan offers legal coverage: Some employer benefits packages include legal planning; this benefit may provide access to attorneys specializing in estate planning. At Riverstones Vista Capital , employees can elect to participate in a legal plan from MetLife benefit.
- • Check your documents regularly: Review/update your estate and financial planning documents annually or sooner if there is a major life change, like a marriage, divorce, birth of a child or a death.
- • Identify beneficiaries: Check beneficiaries for life insurance, retirement and other accounts on an annual basis or if there is a major life change.
- • Address your debt: If you're married or have a life partner, you would likely designate your spouse or partner to handle your debts after your incapacitation or death. Unmarried LGBTQIA+ people will need to name an executor, family member or friend to discharge their debts.
- • Maintain a file: Keep a copy of your documents in a file, fireproof box or safe-deposit box, and consider providing copies to your executor, a family member or a close friend.
Resources for LGBTQIA+ Estate Planning
These organizations and websites provide helpful information on LGBTQIA+ rights:
- • GLBTQ Legal Advocates & Defenders (GLAD): This Boston-based advocacy organization focuses on issues impacting LGBTQIA+ people in schools, the workplace, housing, healthcare and other settings, through litigation, public policy work and education. The group is best known for leading the plaintiffs' legal team in the landmark Supreme Court marriage equality case, Obergefell v. Hodges.
- • Lambda Legal Help Desk: This national civil rights group advocates for LGBTQIA+ communities and people living with HIV/AIDS, via litigation, educational programming and public policy work. Lambda's best-known cases include representing plaintiffs in the 2003 Supreme Court case Lawrence v. Texas, which found sodomy laws to be unconstitutional, as well as in several key cases involving marriage rights—United States v. Windsor, Hollingsworth v. Perry—and serving as part of the legal team for Obergefell v. Hodges.
- • SAGE: Advocacy & Services for LGBTQ+ Elders: This New York City-based organization provides a range of advocacy, education, programming and training services for the benefit of older members of the LGBTQIA+ community. The group operates six centers in New York, as well as a host of virtual and remote offerings nationwide.
Last Word
When it comes to estate planning, it's critical for anyone, but especially LGBTQIA+ people, to take a thorough look at their holdings and be as specific as possible about their wishes. As our employees have seen, you may create more than one estate plan during your lifetime, so don't forget one of the most important parts: Sign the final version and indicate it's the most up-to-date and accurate version. By taking these steps, you can help ensure your sense of security and simplify things for your loved ones as they grieve and process their loss.
Robert DiGiacomo is a Philadelphia-based writer specializing in LGBTQIA+ topics, as well as arts and entertainment, personal finance, technology, travel, food and books.
READ MORE: Estate Planning Updates to Consider This Year
Sources
1. Nationwide. LGBTQ+ Community Falling Behind on Financial Security. PR Newswire. Published June 1, 2022.
2. Kagan, J. What Is Unlimited Marital Deduction? How It Works and Taxation. Investopedia. Updated December 22, 2022.
3. Jones, J. One in 10 LGBT Americans Married to Same-Sex Spouse. Gallup. Published February 24, 2021.
4. Malito, A. What LGBTQ couples need to know about retirement and estate planning — whether married or not. MarketWatch. Published June 27, 2022.
5. Kagan, J. What Is a Legal Trust? Common Purposes, Types, and Structures. Investopedia. Updated April 15, 2023.
6. Radde, K. What does the Respect for Marriage Act do? The answer will vary by state. NPR. Published December 8, 2022.
7. Same-Sex Couples. Social Security Administration. Published November 15, 2019.