5 Tips for Estate Planning for LGBTQ+ Couples

Dan McLennon is a senior director in sophisticated planning strategies at Northwestern Mutual.

A 2015 Supreme Court ruling guaranteed the right to same-sex marriage in every state and gave LGBTQ+ families nationwide access to new legal rights and protections. But even with laws in place, rules can vary by state, which means there are special considerations when it comes to estate planning for LGBTQ+ couples. Here are five tips that can help you make sure your affairs are in order.

Estate Planning for LGBTQ+ Couples

1. Set up an advance health care directive

Your advance health care directive is typically composed of two things: a living will, which details what kind of medical care you would want if you were incapacitated; and a durable medical power of attorney, also known as a health care proxy, which assigns someone to make medical decisions on your behalf if you’re unable to.

A durable financial power of attorney is also good to put in place—this appoints someone to make financial decisions for you if you’re too ill to do it yourself.

It’s important to have this paperwork established, especially if you aren’t married, because you want to make sure your partner legally has the powers you want them to have.

Also, discuss with your spouse or partner whom you would appoint as an alternate for each of you, if either of you were unavailable to make a medical decision.

2. Discuss a plan for your assets

Both a last will and testament and a trust can be used to spell out how you want to divide up your assets, and to whom, after you pass away. One major difference: A trust doesn't have to go through probate, which means it stays private and doesn’t have to complete court proceedings to go into effect.

With a trust, you can also appoint a trustee to oversee that the terms of the trust are executed properly; the trustee can be you while you're alive, and you can appoint someone (such as your spouse, partner or financially savvy friend) to take on the role in the event of your death.

Setting up a will or trust provides a good opportunity to discuss what kind of legacy you want to leave behind with your assets. It gives you the chance to decide who and what is meaningful in your life; for instance, are there charities or mission-based organizations you want to support? In addition to your children, if you have them, you can also designate which other extended family members or friends you want to leave gifts for. Thinking this through in advance can help you feel confident that your wishes will be carried out.

Make sure to double-check state law regarding how a domestic partnership is recognized, particularly if you and your partner have been together prior to the 2015 Supreme Court ruling. In addition, states will have different laws when it comes to the rights of a non-biological parent, and some require multiple witnesses to a will, while others do not.

It’s important to follow every state law to ensure you have rock-solid married status and a legally binding will. You can ask friends or seek a recommendation from a group you’re affiliated with. All estate planners should be well-versed in the mechanics, but you also want to choose someone with whom you can develop a rapport to ask the key questions.

3. Check your beneficiaries

Check whom you've chosen as the beneficiaries for your various financial accounts—everything from life insurance policies to bank accounts to retirement accounts. Beneficiary designations override what you've outlined in your will; so if, for instance, you state your spouse should receive any life insurance death benefits in your will, but you still have an ex-partner listed in your policy, the ex would get the benefit. It's key to check your beneficiaries regularly to ensure they reflect your current preference.

4. Have a plan for your kids' care

Not only does a last will and testament spell out what you want to do with your assets after you pass away, it also appoints a guardian for your minor children, other dependents or pets. The will or a trust can then be used to fulfill the financial care of your kids according to your precise preferences, such as if you want them to receive the bulk of your assets after they reach a certain age.

Having formal documents that lay out your wishes is particularly important to avoid any possible conflict over who should care for your children if one or both of you pass away. For example, if the biological parent of a child dies and the surviving spouse hasn’t formally adopted the child, don’t assume they will automatically become the guardian, as the laws around this will vary by state.

It’s also important not to put off appointing a guardian to care for your kids if both of you were to pass away. This helps ensure that you’re choosing a friend or family member who shares your values and can continue to raise your children accordingly.

5. Always work with a professional

While it might be tempting to do your will and other legal documents yourself, working with estate planning professionals—such as attorneys, tax advisors and financial advisors—who have worked with other LGBTQ+ families is key because, as mentioned above, every state will have its own laws.

There’s no substitute for solid legal advice that ensures your desires will be honored exactly as you wish. Your Northwestern Mutual financial advisor can serve as a great resource, as they can give planning advice as well as recommendations for outside professionals (such as attorneys or accountants, if you need them) to help you decide how to best pass down the legacy you’ve built.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP^®, CERTIFIED FINANCIAL PLANNER^®, and CFP^® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.