As you know, our government doesn’t allow the same considerations for the lesbian, gay, bisexual, and transgender (LGBT) community as it does for other couples. In Colorado, if someone dies without a will, there are statutory provisions indicating where the assets will go. If a “spouse” has died, then the other spouse receives all of the assets, provided they did not have children from another relationship. The legislature in every state has determined what they think the person would have wanted if there was no will or trust giving dispositive instructions for their assets. If the deceased person did not have a spouse, other provisions state that the assets will be distributed to family members in a specific order. In general, assets go first to parents, then to siblings, cousins, etc.
However, no matter how well-meaning the legislators were when they decided how assets should be distributed, they have not addressed the needs of the LGBT community in states like Colorado where partners do not yet have the right to marry. Therefore, it is imperative for the LBGT community to address their specific estate planning needs. This includes creating documents such as wills and trusts, addressing beneficiary designations in bank accounts, investments, etc., and careful titling of real property.
Estate Planning Tools For The LGBT Community
There are tools that can be used to avoid probate, and thus avoid the intestacy statutes associated with probate. For all bank accounts, IRAs, investments, life insurance policies, etc., a beneficiary designation will “trump” the intestate statutes, and leave the assets to the person who is designated as the beneficiary on the account. The person listed as the beneficiary is not required to be a relative, spouse, etc. For most accounts, etc., the beneficiary designation is made easily and can normally be found on the website. Even if you think your partner is listed as a beneficiary, it is wise to review all accounts/policies, etc. to ensure that this is the case. It is also important to provide a contingent beneficiary should something happen to your primary beneficiary prior to your death.
Real property can also be transferred to your partner by a Beneficiary Deed in Colorado and a handful of other states. A Beneficiary Deed is filed with the county in which your property is located. It does nothing until the time of your death. At the time of your death, it transfers over the property to the person listed in the deed after a death certificate is received. This can be revoked and does not affect your ownership rights while you are alive. It also does not create unintended tax consequences that can happen if you deed the property over to your partner while you are alive.
If you own real property with your partner, make sure that the ownership is in joint tenancy with the rights of survivorship and not in tenants in common. If the property is in tenants in common, most likely the property would be viewed as you having 50% ownership and your partner having 50% ownership. Then at the time of your death, your partner would then own the property with perhaps your parents or siblings if you did not also have a will or trust in place. Some people decide that it would be best to add a partner, child, etc. so that it will avoid probate. If you and your partner do not actually own the property together, this is not a good idea. It may put your property in jeopardy if there was an accident and a lawsuit ensued. It would also trigger a gift that may be subject to gift tax and other tax issues at the time of your death.
Finally, and most preferably, you and your partner should create a will or trust, depending on your circumstances, to ensure that your wishes are followed at the time of your death or your partner’s death. Be careful if doing this online. The documents online do not consider beneficiary designations, property titling, or funding of trusts.
The Importance Of Powers Of Attorney And Living Wills
Even more important than doing estate planning for your partner, specifically a Health Care Power of Attorney should be in place. When married spouses do not have these documents in place and their spouse becomes incapacitated, they can always get a legal guardianship through the courts in order to make decisions for their loved ones. It is not the case in the LGBT community, as again the statutes do not recognize the rights of partners. Spouses can also request what is called a “proxy” from a health care institution in order to make medical decisions. It is up to the institution whether or not to grant this “proxy” as the institution then becomes responsible for actions taken. Although some healthcare institutions may grant proxies to partners, it is not something to rely upon, especially given the fact that partners do not have the same legal status as spouses.
A Durable General Power of Attorney will allow your partner to act on your behalf for everything other than health care decisions. It is generally thought of as a financial power of attorney, but it covers things such as automobiles, safe deposit boxes, bank accounts, government agencies, etc. These powers are also important to have in place in case of one of you become incapacitated. Again, for spouses, if they did not create these powers prior to the incapacity, they have the ability to go to the courts and request what is called a conservatorship to allow for them to take care of all financial matters relating to their spouse. This is again not addressed for the LGBT community.
Finally, everyone should have a living will that outlines your desires for care in case of a terminal illness or persistent vegetative state. Don’t leave these issues unaddressed. Talk to your partner and family about your wishes.
Contact an attorney who understands the needs and concerns of the LGBT Community. The Murray Law Firm, LLC offers free consultations to address your specific needs. Please contact us at 303-407-2050 or through our contact form.