by John Wade, Certified Financial Planner Practitioner
While “gay financial matters” can be complicated, some basic planning must take place to protect oneself and one’s partner. This basic protection begins with planning your estate.
Yes, you do have an estate. Though some have more than others, everyone has assets he or she wishes to leave to someone. An important detail is to ensure those assets go to the intended person(s). The first step in this process is executing the appropriate legal documents. For members of the gay community, this step is critically important. Considering that state laws do not treat same-sex couples like married men and women, the time to act is today!
Most likely, no other document is more important in your planning than a will. Any solely owned property and, in many cases, your share of jointly owned property may be passed to an heir of choice through a will. The term property here could include real estate, collectibles and cash accounts, among other things.
Without a will in place, state law determines the distribution of your assets. In most states, without a legal spouse or heirs, the state distributes assets to your closest relative. Your partner may receive nothing unless your will specifies the distribution of assets.
There are occasions when an alternative to a probated will is necessary, especially if family relationships are strained or simple privacy is a concern. If so, then consider a living trust for simple estate issues. A trust is a private document that allows you to maintain privacy related to estate distribution, is harder to challenge than wills and could help your partner avoid what could otherwise become a contentious family situation.
If you have been watching the news lately, you should be familiar with another document that is critical in your planning, Advanced Health Care Directives (AHCD). AHCD replace legal documents commonly known as Durable Health Care Powers of Attorney and Living Wills. Without AHCD in place, a non-relative cannot oversee your medical treatment and a hospital may even deny your partner visitation rights.
By designating your partner as your agent, you are authorizing him or her to carry out your wishes on your behalf if you are unable to express those wishes yourself. In most states, the law allows your agent to make health care decisions, including life-ending decisions.
The third document that completes a basic estate plan is a Durable Powers of Attorney. Durable Powers of Attorney becomes effective only when or if you become incapacitated. This legal procedure allows you to name your partner as your financial administrator should you become incapacitated. This could include operations of a business, gifting of assets to dependants, transfer of assets to your living trust or buy, sell, or lease assets. Without these powers, your partner may be unable to conduct many financial transactions necessary to maintain your home or business.
Single individuals should give equal attention to these matters. Depending upon circumstances, these issues could prove to be even more critical for single people than those who are partnered. Whatever your life circumstances, the advice of a good estate attorney and financial advisor can set you on the road to financial peace of mind and responsibility. Get started today.
John Wade is a CERTIFIED FINANCIAL PLANNER™ practitioner and founder of Freedom Financial in Nashville. He may be contacted at 615.312.7054 or [email protected]