Estate planning considerations for the LGBTQ community

Legal Eagles: How to prepare for the inevitable

[Ed. Note: In this issue, we introduce our new Legal Eagles column which will provide information, tips and resources for qnotes readers.]

On Oct. 10, 2014, the U.S. District Court for the Western District of North Carolina issued a permanent injunction preventing the State of North Carolina from enforcing laws that banned same-sex marriage.  In 2015, this was reinforced when the Supreme Court held, in the landmark case Obergefell v. Hodges, that the right to marriage was a fundamental right for same-sex couples. So now that LGBTQ partners are on the same playing field as opposite-sex partners in marriage, what does this mean for LGBTQ estate planning considerations?

In legalese, intestacy means the condition of being “without a will.” The first and most practical consideration for LGBTQ estate planning is to have a will drafted to make sure that assets are distributed per the individual’s wishes. The will is also where they can appoint a guardian for any biological and/or adopted children who are minors. A will is the centerpiece of any estate plan. If one person in the marriage passes away without a will, then their assets will be subject to the intestacy laws of the state in which they reside. In North Carolina, this can have unintended consequences that may deprive the surviving spouse of a great deal of assets that they were supposed to receive.

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In North Carolina, if one spouse dies leaving behind only their partner and their parents, then the parents could be entitled to half of the deceased person’s interest in real estate and half of any personal property of the deceased after the surviving spouse has received $100,000. For example, if an LGBTQ couple purchased a home in 2010 before Obergefell and they are not listed on the deed as “tenants by the entirety” or “joint tenants with the right of survivorship,” and the deceased also had assets totaling $150,000, then the unintended consequence is that the deceased person’s parents will receive a one-quarter interest in that real property and $25,000. Emotional issues aside, this can cause a great financial hardship for the surviving spouse or partner when they are suddenly faced with funeral expenses, probate costs, and other fees. Even worse, if the property was only deeded to the deceased spouse, then the parents would be entitled to a one-half interest in that real property.

LGBTQ couples should spend time working and becoming comfortable with an attorney in order to create a solid estate plan that lays out what the couple wishes to achieve and provides for those who become the beneficiary of one’s estate. Photo Credit: micromonkey via Adobe Stock

The intestacy laws are even less kind to long-term LGBTQ partners who have chosen not to marry. In this situation, North Carolina intestacy laws could award all the personal property and all the intestate real estate to the deceased partner’s parents. There is good news, however, because marriage is not a pre-requisite to having a will. Anyone can bequeath real property and personal property to their intended beneficiaries, whether “family” or not, through a well-drafted will.

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Another important consideration for married and unmarried LGBTQ couples is to make sure that they have properly executed both durable and health care powers of attorney so that they can make important financial and health care decisions for each other if they become incapacitated. Married couples are often under the mistaken belief that by being married they automatically possess the power of attorney for the other spouse if something were to happen, but this is not always the case. Therefore, it is critical for estate planning purposes that a power of attorney be executed for each person so that the spouse or partner can make important financial and health care decisions in the event their significant other becomes incapacitated.

These are just a few considerations that LGBTQ couples should think about when looking toward their future with estate planning. It is always recommended that any LGBTQ couple meet with an estate planning attorney that handles LGBTQ issues. At Barber Power Law Group, our experienced estate planning attorneys know the laws affecting the LGBTQ community and how to plan estates in compliance with these laws.

info: Michael P. Pascale, Esq. is an attorney with Barber Power Law Group in Charlotte, N.C.

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