Many New York residents may think that wills and trusts are only for traditional families. However, non-traditional families -- such as those including gays, lesbians, bisexuals and transgendered people -- often face special estate planning needs, as many states do not recognize same-sex marriages. Even in states that do recognize same-sex marriages, like New York, one partner may not be automatically entitled to the other's benefits upon death.
Without a will or a trust, a person's assets could be distributed to a family member, depending on state law. Estate assets may not pass to a person's domestic partner, no matter how long they have been together. A will is an essential component of a comprehensive estate plan, but a will can be contested in court, especially if a family member disapproves of a person's relationship. For that reason, trusts may be important elements of an estate plan for same-sex partners.
It is also important that same-sex couples specifically designate their partners as beneficiaries on accounts such as IRAs, 401(k)s and life insurance policies. If not done properly, these accounts can end up in probate or passing to blood relatives.
Establishing a power of attorney and health care proxy is also critically important for same-sex partners. These instruments allow a person to make health care and financial decisions for another person should he or she become unable to do so. That authority is often assigned to be the spouse under "next of kin" rules, but it may be conferred upon other family members in states that do not recognize same-sex partnerships. But unmarried same-sex couples in New York should consider these issues as well.
Under current law, only those in a traditional marriage are given the full range of both state and federal rights. Same-sex partners may have difficulty with federal estate tax laws and transferring federal benefits like Social Security benefits. An experienced estate planning attorney can help same-sex couples take the steps necessary to achieve their estate planning goals.
Source: Accounting Today, "Marcum Offers Estate Planning Tips for LGBT Families," Michael Cohn, Nov. 19, 2012