6 Estate Planning Tips for LGBTQ Individuals

Estate planning is important for everyone, but it involves additional considerations for LGBTQ individuals due to specific legal and family circumstances. Whether you are in a same-sex marriage or domestic partnership, estate planning can help you with property ownership, medical decision-making and the distribution of assets. LGBTQ individuals should be aware of potential challenges and available protections when drafting wills, setting up trusts and handling other estate matters.

A financial advisor can work with you to create an estate plan that complies with legal requirements.

Why Estate Planning Is Important for LGBTQ Individuals

Historically, LGBTQ individuals faced legal barriers that made it difficult to transfer assets, designate healthcare decision-makers or establish inheritance rights, particularly if they were not married. While the legalization of same-sex marriage has addressed some of these issues, many LGBTQ individuals still face challenges when planning for their estates.

For unmarried couples or those in domestic partnerships, estate planning becomes even more complicated, as state laws could prioritize biological relatives if you don't have a will, also known as dying intestate . Without an estate plan, assets could be distributed in ways that do not reflect your intentions, potentially excluding a partner or chosen family members.

LGBTQ estate planning also allows individuals to appoint guardians for children and create healthcare directives. This could help avoid future family disputes.

Special Considerations

When it comes to estate planning, LGBTQ individuals may need to address specific considerations that go beyond traditional estate planning. Here are four to consider:

• Marital status: If you are in a same-sex marriage, your spouse will generally have inheritance rights, similar to heterosexual couples. However, if you are unmarried or in a domestic partnership, you may need to take extra steps to ensure that your partner is legally entitled to inherit your assets or make healthcare decisions on your behalf.
• Parental rights: Parents should ensure that their LGBTQ estate planning reflects their parental status, particularly in cases of adoption, surrogacy or co-parenting arrangements. Wills, guardianship designations and trusts can help ensure that your children are cared for by your chosen guardians if something happens to you.
• Family dynamics: In some cases, LGBTQ individuals may have strained relationships with their biological families. Estate planning allows you to specify who will inherit your assets, with the goal of preventing estranged family members from laying claim to your property against your wishes.
• Healthcare directives: LGBTQ individuals should have a healthcare directive in place that specifies who can make medical decisions on their behalf, if they become unable to make decisions for themselves. This is especially important in cases where hospitals or other institutions may prioritize biological family members over partners or chosen family.

6 Estate Planning Tips for LGBTQ Individuals

If you want to create an estate plan, here are six general tips that you could follow to get started:

• Create a will . For LGBTQ individuals, it's important to specify clearly who will inherit their assets, especially if they are unmarried or in a domestic partnership. Without a will, your assets may go to biological family members instead of your partner or chosen family.
• Designate power of attorney . A power of attorney lets you appoint someone to make legal and financial decisions for you if you become incapacitated. This is important for LGBTQ individuals who want their partner or trusted person to be in control instead of a family member who may not respect their wishes.
• Establish a healthcare directive. A healthcare directive, or living will , designates someone to act as your healthcare proxy, allowing your partner or chosen person to make medical decisions on your behalf, if needed. And could help avoid potential legal disputes or challenges from family members.
• Consider a trust. A trust can help LGBTQ individuals avoid probate and allow for the transfer of assets to their beneficiaries. Trusts are useful for protecting assets and carrying out your wishes without the need for court intervention. Several types of trusts may work for your estate, including a testamentary trust, special needs trust and charitable trust.
• Name guardians for children. You should consider estate planning for your children , and naming guardians in your will is a key step in that process. This allows you to specify who will care for your children if both parents pass away and helps avoid the risk of a court appointing someone who may not align with your beliefs and wishes.
• Update your beneficiaries. Be sure to regularly review and update the beneficiaries on important documents and accounts. This can include life insurance policies, retirement accounts and other financial instruments. Make sure they reflect your current relationship status and estate plan, especially after significant life changes like marriage, divorce or the birth of a child.

Bottom Line

Estate planning is a key strategy for LGBTQ individuals who want to secure their future and protect loved ones. Whether you are married, in a domestic partnership or single, you should take the time to create a comprehensive estate plan to manage and distribute your assets to loved ones, as well as looking after them with a designated guardian. By considering your specific circumstances and working with a knowledgeable estate planning attorney, you can create a plan that complies with legal requirements and gives you peace of mind.

Estate Planning Tips

• A financial advisor could help you create an estate plan based on your goals and needs. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now .
• If you want to save some money and create an estate plan on your own, here are some common pitfalls that you should avoid .

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