LGBTQ+ married couples enjoy many of the same financial benefits heterosexual couples do regarding access to a spouse's retirement plans, Social Security benefits and military survivor benefits. But securing your family's financial future isn't necessarily as easy as saying "I do."
Unmarried LGBTQ+ couples must take extra steps to ensure their wishes are carried out. And as many states restrict LGBTQ+ rights and the Supreme Court hints it may revisit Obergefell v. Hodges, the ruling that legalized gay marriage, even married couples must be intentional about financial and estate planning. Here are 10 documents LGBTQ+ couples need to protect their finances.
1. Cohabitation, Domestic Partnership or Civil Union Agreement
Many committed couples don't want to get married. If that's you, legal documentation of your relationship can spell out each party's financial responsibilities both while you're together and if you split up. Not all jurisdictions recognize cohabitation agreements, but if yours does, it's often wise to document decisions about child support, financial support, joint financial accounts and responsibility for debts.
Domestic partnerships and civil unions, although they've waned in popularity since the legalization of gay marriage, can serve a similar purpose. However, these unions may not grant all the tax and legal benefits of marriage. Not all states recognize them, nor does the federal government and its agencies such as the IRS and Social Security Administration.
If you already have a domestic partnership or civil union agreement—especially one drafted pre-2015—have an attorney familiar with LGBTQ+ issues review it. Laws have changed in some states, and some civil unions may have been converted into marriages following Obergefell, for instance.
A will explains how you want your assets distributed upon your death and names an executor to supervise the process. You can also use a will to name guardians for minor children. State laws differ, but if you die intestate (without a will), your assets are typically given to your next of kin—a spouse, children or other relatives. If you're not married, your surviving partner could be left in the cold. Unless you're the biological parent, your child may not be considered next of kin, either. Your property could go to an estranged parent or sibling or, if family can't be found, to the state.
A living trust is a legal entity into which you can transfer assets. The trust document specifies how they should be distributed after your death. Wills must go through probate, a legal process in which a judge validates the will and oversees its executor. Trusts do not require probate, so your loved ones can receive your assets quickly.
Unlike wills, which are a matter of public record, trusts are private. A trust can also help prevent unsupportive family members from interfering in the settlement of your estate. Contesting a trust is typically more difficult than challenging a will.
4. Real Estate Documents
If real estate you own with your partner is titled appropriately for your state laws, ownership passes to them upon your death. In most cases, property owned as joint tenants with right of survivorship will go to the surviving owner.
5. Beneficiary Designations
Many retirement plans, life insurance policies, brokerage accounts and other financial accounts require you to name a beneficiary in the event of your death. If you've listed your partner as the beneficiary on these accounts, the asset usually transfers directly to that person when you die, without the need for probate.
Beneficiary designations are an easy way to make sure your assets go where you want them to, but be sure to keep them current. Beneficiary designations on accounts generally supersede the will if the two conflict. If you haven't updated these documents since your single days—when your mom was your beneficiary—your partner may be out of luck.
6. Adoption Documents
In many LGBTQ+ couples, one partner is a biological parent of their child. Depending on state laws, the non-biological parent may have no legal standing unless they legally adopt the child. Without adoption, you could lose custody if you split up or your partner dies. Adoption can also ensure that if the non-biological parent dies intestate, their child is legally considered next of kin and in line to inherit any assets. Keep a copy of your child's adoption decree or certificate and amended birth certificate.
7. Financial Power of Attorney
A financial power of attorney grants another person the legal right to make decisions about your finances if you can't do so due to physical or mental incapacitation. Without this document, a court will appoint a conservator or guardian to make these decisions for you. This is generally a family member, which could put a relative who doesn't approve of your relationship in charge of paying your partner's bills.
8. Medical Power of Attorney
A medical power of attorney names someone to make decisions about your medical care if you're incapacitated. If you aren't married and don't have medical power of attorney for your partner, you may not have any say in their medical care. Instead, a doctor or distant family member may make critical decisions such as whether to perform CPR or put your loved one on life support.
9. Living Will
A living will documents your wishes for your medical care (including end-of-life care). Even if you don't have a medical power of attorney, instructions in your living will must be followed. Because it's read long before your will, your living will should also explain your wishes for your burial and funeral.
A living will can be especially valuable if you're trans. Whether or not you've medically transitioned or legally changed your name, you can use a living will to specify the name you want used and how you want to be dressed while in a medical facility, the clothes you want to be buried in, the name you want on your headstone and more.
10. Documents Related to Name Change
Names are important in legal and financial documents, but legally changing names and gender markers can be time-consuming and costly. Just 21% of transgender individuals who have transitioned have successfully updated all their records and identification documents, according to the most recent National Transgender Discrimination Survey, and one-third haven't updated any of them.
Unfortunately, inconsistent names or pronouns in financial and estate planning documents can cause problems. If you're still in the process of transitioning and/or changing your name, it can be helpful if your documents include both former, or "dead," names and the legal name you plan to adopt. Using gender-neutral pronouns throughout documents can further prevent confusion.
Safeguard Your Financial Future
A complex patchwork of laws can make financial and estate planning extra challenging for LGBTQ+ couples. Working with an estate planner familiar with your state's laws and the issues facing LGBTQ+ people can help ensure your plan touches all the bases. Checking your credit score, improving your credit if needed and signing up for free credit monitoring from Experian are other steps to building a bright financial future for your family.