Estate planning is a crucial part of overall planning for any couple. Same-sex couples, in particular, have unique interests and concerns when it comes to putting together an estate plan. As a couple, it pays to have access to resources that will help you preserve your assets. Wealthy or not, you must take the necessary steps towards estate planning for same-sex couples much earlier for your own protection.
Create a Will
One of the best ways you can ensure that your assets get passed on to those you desire is to create a living will (avoids probate). A current and valid living trust can spell out who is going to inherit your assets. Through the living trust, you can also nominate the guardian of your choice for your children or arrange for an adult who will take charge of any assets your children will inherit. You can even name a preferred caretaker for your pets.
Without it, you will be increasing the chances of your property getting passed on to an unintended beneficiary, and this is not a recommended course of action in estate planning for same-sex couples.
Relying on a qualified estate planning lawyer is a must to make sure that you, as a couple, are well-guided about creating a valid living trust.
Maximize the Use of Estate Planning Tools
There are tools that you can use that are ideal in estate planning for same-sex couples. This is especially called for to avoid the lengthy and expensive process called probate. Probate court proceedings allow for the wrapping up of a deceased individual’s assets so they can be transferred to their rightful heirs. However, they can be quite confusing and costly. You want to avoid probate at all costs.
Fortunately, there are three options in California that you can utilize which involves drafting living trusts; joint ownership; and transfer-on-death registrations, accounts, and deeds.
A must in estate planning for same-sex couples is the drafting of a living trust for any and all assets that you own. From real estate, vehicles, to bank accounts, you have to make a trust document that names the person who will take over as the successor trustee.
The magic of this type of estate planning for same-sex couples is that at the death of one owner, jointly owned properties are automatically transferred to the other owner. This is made possible when the joint ownership bears the “right of survivorship” because, through this, the surviving owner becomes the automatic owner of the property. Probate is not required in this case, and only a small amount of paperwork is required showing that the property title is solely held by the surviving owner.
In California in particular joint ownerships have been made available as joint tenancy and community property with “right of survivorship.” However, for those couples who are married or have registered as a domestic partnership, joint ownership could expose the surviving partner to capital gains tax as there is no step-up in basis. But if a surviving partner inherits the deceased partner’s share of the property through a trust, there is a step-up in basis resulting in the reduction or elimination of a capital gains tax.
Transfer-on-Death Registrations, Accounts, and Deeds
Probate court proceedings will not be required when you use these Transfer-on-Death (TOD) tools. Transfer-on-death registration for vehicles allows for the automatic transfer of the vehicle to your beneficiary upon death.
TOD deeds for real estate or beneficiary deeds will allow you to sign and record the deed today, but let it take effect only after you pass away. You can choose to revoke it or sell the property anytime.
For your bank accounts, you may add the “payable-on-death” designation so that your beneficiary is able to claim the amount from your bank directly. While you are still alive though, you will have full control of your account.
Prepare Your Health Care Directives
One of the most vital aspects of estate planning for same-sex couples is the preparation of health care directives. This directive will give your medical care professional a legal guide as to how you would want to be taken care of in case you get sick or have an accident. It will also outline your ability to reject unwanted medical treatment and request for the one you prefer.
This document includes a clear statement naming the person you trust to make important decisions for you should you not have the capacity to do so. Your relationship as a couple will not be legally questioned should you name your partner in your health care directives. In this way, if you or your significant other does not have a good relationship with blood relatives, you can be assured that your partner’s decisions are the ones to be followed.
It is advisable that estate planning for same-sex couples be accomplished way ahead of time and this is especially applicable for any final arrangements. The final arrangements document details your remains, funeral, and burial wishes. It can include embalming, cremation, caskets, headstones, ceremonies, and payments involved. While it is not legally binding, its importance lies in your desires and preferences being followed when you reach this stage. For instance, it will spare you the worry of your remains or ashes not being given to your partner or you not getting buried next to your significant other.
At the Estate Planning Law Center, it is our goal to make sure that your estate plan is complete and correct according to California state laws.
If you are a same-sex couple and need assistance with your estate plan, please call us at (818) 462-8400. We have over 25 years of experience and offer a free consultation to discuss your options.