In the wake of the Supreme Court’s 2015 landmark ruling in Obergefell v. Hodges, same-sex couples nationwide are finally enjoying marriage equality. Whether you are legally married in the eyes of the law, or not, there are important additional legal planning steps you need to take to ensure your wishes are honored in the event of your disability, or your death.
The landmark ruling was just the beginning. With new rights, come new responsibilities. Marriage affords certain legal rights and responsibilities that domestic partnerships, civil unions and simply living together with or without a written agreement do not. There are many estate planning options that are now open to LGBT couples, provided that they legally marry. By ensuring your estate planning documents are up to date, you can safeguard your surviving spouse’s federally protected rights.
Know Your Rights
A significant concern of many same-sex couples is whether one spouse will retain beneficiary rights if the other spouse dies. Unfortunately, before marriage equality, it was often the case that same-sex partners were deprived of certain rights that opposite-sex spouses enjoyed. Before the legalization of same-sex marriage in Florida, a widowed same-sex partner was not entitled to tax or intestate benefits that opposite-sex couples were entitled to. Since the Supreme Court‘s ruling, same-sex couples are now entitled to all the rights that opposite-sex couples have. These rights pertain to assets such as retirement accounts, social security benefits, and insurance policies.
For example, the Employee Retirement Income Security Act (ERISA) requires same-sex spouses be treated equally in the event one spouse dies. This means ERISA governed retirement plans such as 401Ks are handled just as they would be in any marriage; the surviving spouse is the automatic beneficiary of the plan. Retirement accounts not governed by ERISA may have different rules, so check with your individual plan regulations. The Social Security Administration treats all marriages equally, and so the SSA’s rules and restrictions apply to married same-sex couples. This means that if you want your 401k to go to anyone other than your surviving spouse, you need to take specific action, beyond merely naming another beneficiary.
In Florida, spouses automatically obtain an interest in the family home, if it is homestead property. This becomes important if a couple separates, but does not legally divorce. Let’s look at the situation of John and Thomas, who married in 2017. When they married, John owned a home in Fort Lauderdale for which homestead was elected. Thomas was never added to the deed. After seven years of marriage, they separate, but do not divorce. John has a sister, Stephanie, who also lives in Florida. Unexpectedly, John has a heart attack and dies. Who gets the house – Thomas, the separated spouse, or Stephanie, the next of kin?
Answer – because they are still legally married, Thomas gets the house. Spousal homestead rights are incredibly strong in Florida.
In a more positive scenario, marriage provides a nearly automatic asset protection benefit to a couple buying a home together. John and Thomas buy their home together and live there as a married couple. By operation of law, they own the property as “Tenants by the Entireties” or “TBE.” This type of ownership is different from the more common “Joint Tenants with Right of Survivorship.” The TBE ownership is neither John’s nor Thomas’, but instead the married entity that is John and Thomas. Creditors cannot attach TBE property for the collection of debts. TBE is also available for bank accounts, investments, boats, planes, and even tangible property such as jewelry, furniture, and other household items. TBE is only available to couples that are married at the time the property is acquired.
To qualify for the property as TBE, the following six things must exist:
- Unity of possession;
- Unity of interest;
- Unity of title;
- Unity of time;
- Survivorship; and,
- Unity of marriage.
Beyond a Will
No matter what your marital status is, estate planning is something that every person needs to address. If you are an LGBT couple operating without the legal protections and advantages afforded by marriage, a few key documents are important for your peace of mind.
If you are not married in the eyes of the law, for whatever reason, you can use estate planning to replicate many of the marital rights. For example, if you are partnered, but not married in the eyes of the law, your life partner could be cut out of your affairs at the end of your life, or in the event of a disability. This is why it is so important to go beyond the will to ensure that your loved ones will be cared for in the case of incapacitation or death.
If at the time of death there is no will in place, the surviving spouse is entitled to all, or half of the deceased spouse’s probate assets. There are many legal scenarios that prompt new considerations when planning your estate plan.
When planning for your future, make sure to further discuss the following questions:
- How are your assets structured?
- Does your current estate plan provide enough for your spouse and family members? Charities? Pets?
- Should you explore other trusts or options?
You have created your will, but have you taken other precautions to ensure that your last wishes and health care choices are executed?
Documents you may need
Domestic partnership agreement:
This partnership between two people who share a common domestic life is essentially a civil union in which each person is committed to the other. Meant as a substitute to marriage, this lets the two of you lay out plans to share income, expenses and property. If you have children, you’ll need to outline custody plans in case something happens to one or both of you or in the event of separation.
A living will outlines your desire for life-sustaining nourishment and artificial life support if you are unable to do it for yourself. Absent a living will, your loved ones will be forced to make a decision about whether or not to continue life support for you. The most notable story of the drama that ensues if a person has no living will is that of Terry Schiavo.
Along with the living will are the Health Care Surrogate and a HIPAA authorization. The former is a health care power of attorney that allows a third person to make medical decisions on your behalf. This is different from the living will in that a Health Care Surrogate can authorize treatment on your behalf that does not necessarily pertain to a life or death situation. The living will addresses your end of life desires. The HIPAA authorization permits your treating physician and their staff to discuss your medical situation with the people you designate.
This document is created during your lifetime. You can control your assets while alive and can outline who receives your assets upon your death as well as allowing your beneficiaries to avoid the delays and costs involved in the probate procedure.
Power of Attorney:
A power of attorney is a legal document in which you give someone the power to act in your place with regards to finances and other matters. You will want to set up a power of attorney should you want your spouse, domestic partner, or someone you choose to be able to make decisions for you should you become incapacitated and unable to handle matters on your own. In Florida, the power to act on your behalf are not “springing” powers meaning that a Power of Attorney is effective immediately after being executed. Choose carefully!
The magic wand of marriage equality created a new paradigm across the United States. In the words of Spider Man’s Uncle Ben – “With great power comes great responsibility.” Marriage is a powerful option, both personally and legally, which also comes with new planning considerations. Married couples of all persuasions should always think through and plan for their future.
Regardless of marriage equality, it is still critical to understand exactly what will happen to the people you love and everything you own and care about, when something happens to you, under the State’s plan for you. That’s what our Family Wealth Planning Sessions are all about you making informed, empowered, educated decisions for the people you love.
 Respectfully, we recognize that people are defining themselves and their relationships differently than in years past. Regardless of how people view themselves, the law provides specific rights to married couples. Estate planning can assist unmarried couples; however, most federal and state laws are written with a person’s marital status as either “yes” or “no.”
 Tenancy by the Entireties has been around a long time, but is always subject to interpretation by the courts. Different judges may rule in various ways. The case law on this issue is diverse. You should speak to an attorney about your options and if your property qualifies.