Advising Gay and Lesbian Clients

ESTATE PLANNING has become a priority for many following the horrific events of Sept. 11. In recent months, there have been numerous articles written on the subject, and experts can frequently be seen on television programs speaking about the necessity of estate planning.

As attorneys see an upswing in the number of clients interested in estate planning, they need to be mindful of the various estate-planning needs of the average client. In today’s world, however, there is no such thing as the "average client." Typically, discussions on estate planning or probate matters assume that the clients are a husband and wife with a child or children. While it is true that the majority of estate-planning clients fit this profile, there are many non-traditional families and individuals who are becoming increasingly aware of the necessity of estate planning.

The law does not guarantee members of non-traditional families the same rights that are afforded traditional family members. For a non-traditional family to gain some protection, its members must be sure to spell out end-of-life decisions through advanced estate planning. This article highlights some of the points attorneys need to be aware of when helping non-traditional family members conduct estate planning.

What is a non-traditional family?

What typically comes to mind is a gay or lesbian couple (with or without children), but a non-traditional family could also be an unmarried heterosexual couple (also with our without children). Although in New Hampshire common law marriage can be established for unmarried heterosexual couples upon death for the purpose of probate, the standard for proving such is high. It is much less costly and more practical for an unmarried heterosexual couple to plan ahead by doing proper estate planning.

Non-traditional families have existed for years. Gays and lesbians have been in long-term, committed relationships and have held themselves out as families since well before the emergence of civil unions in Vermont and domestic partnership laws in Hawaii. Gay and lesbian couples have entered into civil unions or religious unions to strengthen their relationships and family commitments every year. They make joint decisions to have or adopt children. They jointly parent their children and save for their children’s futures, just as heterosexual couples do. They are a family in every sense of the word, except that they are not protected as such under either New Hampshire or federal law.

How do these families protect themselves and why?

In estate planning, what is most important for gay and lesbian couples is establishing who will make end-of-life decisions for an individual if he or she is incapacitated. This can be done through such documents as a Healthcare Power of Attorney, living will, Financial Power of Attorney, will, trust, guardianship form, hospital visitation form and Declaration of Intentions form. It is of utmost importance for a gay or lesbian client to complete these legal documents in order to protect his or her partner’s rights and the integrity of the family unit. If proper estate planning documents are not in place, an individual’s legal next-of-kin, rather than his or her life partner, can legally take control and make end-of-life decisions for the individual.

The first thing attorneys should discuss with non-traditional clients, regardless of the client’s marital status, is what prompted the individual to decide to address estate planning, and what he or she wants to accomplish through it. Next, it is extremely important for an attorney to understand how a non-traditional couple has titled property and manages household expenses, whether the couple has any commingled funds, and if the couple’s property is owned jointly. This is especially important if the couple’s property is subject to federal estate tax.

The I.R.S. assumes that all married couples own property equally. When one spouse dies, the surviving spouse takes 100 percent ownership of the property, free and clear of any taxes. However, for non-married couples, the I.R.S. and New Hampshire Department of Revenue take the position that even if property is titled jointly, for tax-reporting purposes, it is owned 100 percent by the deceased individual, leaving the burden of proving contribution toward the property to the surviving partner. This requires a lifetime of record keeping. If detailed records are not kept, it can be financially devastating to the surviving partner.

Also, in New Hampshire, there is an 18 percent legacy and succession tax on any property transferred to a non-exempt individual, unmarried partners being among the non-exempt. The legacy and succession tax will be repealed on Jan. 1, 2003, but until then, the property of non-traditional couples is subject to this tax. It is important that individuals are able to account for contributions toward joint property so that they are not paying 18 percent tax on property that they owned jointly.

Additionally, if a couple’s property – including land, bank accounts, etc. – is not properly titled, then title will not pass immediately upon death, as the decedent may have intended. The presumption for a married couple with a joint bank account is that upon the death of a spouse, control of the account would automatically transfer to the surviving spouse. But for unmarried couples, unless the joint account specifies "as joint tenants with rights of survivorship," it will not be presumed that the decedent’s intention was for his or her partner to obtain sole control over the account. The account will, therefore, become part of the decedent’s estate, leaving the surviving partner unable to access his or her own monies.

What can each of these estate planning documents accomplish?

Wills: Wills are especially important to gays and lesbians because they are the only means by which to provide for their non-traditional family members after death. As with any will, a client can nominate his own executor and designate how he wants his possessions to be distributed. If a will is not completed, then the individual will die intestate and her assets distributed according to the law, which in most cases is not what the deceased would have intended. The partner can petition the pro bate court to be assigned administrator of the will, but if a family member also petitions the court, the partner may not succeed.

Also, if the couple has a child and one of them is the biological parent who then passes away, the decedent’s will could specify a guardian for the child. If a guardian is not specified, then the surviving partner would have to petition the court for guardianship, and, again, if a family member also petitions for guardianship, the partner may not succeed. It is also important for a client to specify in her will if there is someone she specifically does not want the court to appoint as guardian. "No-contest" clauses are an effective tool in wills; they provide an extra layer of protection and emphasize to the court implicit intentions.

Trusts: For gay and lesbian couples, placing assets in a joint trust will provide a smoother transfer of property. If a trust is funded properly, probate can be avoided and transfer of property to the surviving partner can be immediate. If a couple has a minor child or children, a trust enables the couple to designate who will maintain assets for a minor child who is a beneficiary.

Financial Power of Attorney: If an individual becomes incapacitated, a Financial Power of Attorney allows his or her unmarried partner to manage the individual’s finances. With the financial power of attorney, the partner can, for example, access the individual’s bank accounts to pay bills, access safety deposit boxes or transfer property. If an individual does not establish a Financial Power of Attorney and a situation arises requiring it, the partner would have to petition the court for this power, which is costly and may not be granted in a timely manner, if at all. Again, the court would more readily grant the financial power of attorney to an individual’s next-of-kin if so petitioned.

Healthcare Power of Attorney: This allows an individual to make healthcare decisions on behalf of his or her incapacitated partner. It is extremely important for an unmarried partner to establish a Healthcare Power of Attorney. Without it, the intended healthcare wishes of the incapacitated partner may not be carried out. In addition to completing the statutory form, I also encourage unmarried clients to include a section listing the extended powers granted to a healthcare agent. It spells out what exactly the healthcare agent, who may be the unmarried partner, is legally capable of doing.

Hospital Visitation Form: This form can give an individual preference in terms of visitation and access to information when his or her life partner is hospitalized, the same way a spouse would have preference over other family members. This form provides valuable protection for gay and lesbian couples whose family members may not respect or recognize a gay or lesbian relationship as they would a married couple’s, or even a non-married heterosexual couple’s, relationship. Married couples and blood relatives are always provided visitation without question, but, unfortunately, there are too many stories of unmarried individuals not being allowed to see their partners, by decision of the hospital or family members.

Nomination of Guardianship Form: By completing the Nomination of Guardianship form, the client informs the probate court who he wants appointed guardian of his person and/or estate should appointment of a guardian become necessary. New Hampshire has a unique provision that also allows a person to specify who she does not want to be appointed as a guardian. For many gay and lesbian couples, this is an important provision because it protects the rights of the unmarried partner, rights that might otherwise not be given credence by the law or by those family members who may not accept the partner in the same capacity they would a spouse.

Declaration of Intentions: By completing this form, clients can specify who they want to make their funeral arrangements, what kind of arrangements and who should have control over their remains. Without this designation, the next-of-kin would have ultimate control over these arrangements, rather than the deceased’s partner. Increasingly, clients are developing very specific requests for their funeral arrangements.

Where should unmarried couples store these valuable documents? Although many married couples keep documents such as wills and deeds in safe deposit boxes, remember that for an unmarried couple, even if both names are listed on the safe deposit box, the surviving partner may not be able to gain access to it upon death of the other partner. Therefore, I encourage clients to place these important documents in a fireproof safe accessible to either partner.

I also encourage clients to carry the Financial Power of Attorney, Healthcare Power of Attorney, hospital visitation form and Declaration of Intentions form with them when travelling, should a situation arise requiring their use.

Finally, it is especially important to gay and lesbian clients that their attorneys be understanding and knowledgeable of their unique situations. You do a disservice to your clients and to yourself if you do not educate yourself on the laws of estate planning and how they affect non-traditional families. Gay and lesbian couples are often as committed to each other as married couples and want the same protections for their relationship that marriage provides heterosexual couples. It is important to be honest with yourself and your perspective clients about your comfort level with advising gays and lesbians and your knowledge of appropriate estate planning. Their protection relies on it.

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