Proactive Steps in case Marriage Equality is Overturned

Frank Summers |
Categories
LGBTQ+
LGBT
marriage equality
Obergefell

In my first #SpillingTheTeaOnLGBTFinances, I promised to speak directly to issues pertaining to LGBT finances. In the short time since then, the Supreme Court overturned Roe v. Wade. In doing so, Justice Clarence Thomas directly named Obergefell v. Hodges, the case that legalized marriage equality nationally, as one he felt was incorrectly decided and set a direct invitation to challenge it. In other words, abortion rights were the first step; they intend to come after us. Given the political nature of several of our red states governors, each trying to out-red-state the other, it’s fair to be concerned that marriage equality would be a priority for them to legislate out of existence.

How can we be proactive about protecting our relationships? 

I’ve seen several questions online about how do we protect ourselves if marriage equality is reversed. There has been some really incomplete advice, such as “have a will,” and “talk to a lawyer.” The issues of married vs unmarried are complex and understanding which professionals help and advice on particular topics is important. Should you talk to a lawyer? Yes. Should you also talk to a Certified Financial Planner who specializes in LGBT relationships? Almost certainly. 

Marriage provides more than 1,100 benefits and privileges, so thinking about proactive steps can seem overwhelming. You will need to think holistically about your life and your relationship and the impacts on the major areas below.

Ultimately, the most important factor will be the things that can help you and your spouse feel more protected. No one else can decide that list for you. You will need to make some decisions about what to do and when. Some of these are involved and expensive, some are not. I will provide some information about each of these, and a quick-hit list at the end. 

  • Property ownership and titling
  • Protecting our children
  • Taking care of one another in sickness or injury
  • Social Security & Pension benefits
  • Taxation
  • What happens when government assistance is needed - Believe it or not, it gets even more complex for people who don’t have a significant nest egg, and may need to rely on Medicaid.  
  • When one partner dies

Because the planning for unmarried people is so complex, and because we don’t know exactly what will happen yet, let’s focus on being proactive for the things we can handle.

Property Ownership and Titling
Jointly owned property is generally owned as Tenants in Common, Joint Tenants with Rights of Survivorship or Tenants in Entirety. There are reasons for these designations and creditor and tax implications. It’s more complex than it looks. Even if marriage equality is rescinded, these are matters that can be revised. It’s complex and expensive, and frankly, a pain, so this is not on the short list to address.

Protecting our Children
While there have been significant improvements in how LGBT people create families, there can be concerns about how to ensure parental rights will be respected. This can be particularly concerning if there’s some form of medical emergency or someone is out of state. This is one area where a family law attorney experienced in LGBT issues is a must.

Taking Care of One Another in Sickness Or Injury
Marriage provides important benefits when someone is incapacitated by illness or injury, such as allowing the other partner to make decisions. A medical Durable Power of Attorney with HIPAA authorization is important in any circumstance, especially in this one. It's also important to identify your partner to your medical providers. Many doctors and hospital systems would encourage you to provide copies of your Power of Attorney and any other directives to them, so they are on file.

When someone is incapacitated, the able-bodied partner will need access to money and accounts. For this, you will need a financial Durable Power of Attorney. If you give financial power of attorney to someone, it does not automatically give them access to your accounts. Just as with your medical directives, you should be sure that your financial directives are on file with your financial account providers. This is important: If someone shows up to my office and presents a Power of Attorney, and I do not know who they are, I will not honor it. My first duty is to my client, who I know, have spoken to, etc. If I don’t know the person with the POA, then I am going to go out of my way to ensure that it is valid and represents the wishes of my client. So be sure those forms are shared and on file with financial managers. Don’t ignore this aspect. When someone is incapacitated or deceased, their partner will need money fast. 

Social Security & Pension Planning
A significant part of retirement planning for a couple is based on Social Security and Pension planning. This, too, can be complex and should be addressed when and if there is action to rescind marriage equality. One additional action step: If you were in a long-term committed relationship for more than 10 years before marriage equality became legal, make sure the Social Security Administration enters a claim for benefits on your behalf. Even if you cannot claim benefits now, make sure that your name and contact information is in the Social Security database. Rights, rules, and processes change with Social Security regularly, and you want to be sure your information is on file with them.

Taxation
This, too, should be addressed when we are closer to action on marriage equality, with one exception. Today, any single person with an estate valued at $12.06 million will not pay estate tax. If that person were married, there are marital deductions and benefits that essentially double that amount for a married couple. When the current estate tax limits expire at the end of 2025, that amount could be revised down to about $6 million, unless Congress acts. In this case, it could mean a significant tax bill for the surviving unmarried partner. There are ways to address this that should be discussed with a Certified Financial Planner.

Medicaid Planning
On a good day, Medicaid planning for married couples is complex. There’s a 5-year lookback period that can have significant impacts on benefits. For unmarried people, Medicaid planning is much more complex. Ownership of homes and assets could be affected. Many people wait until they believe they may need Medicaid benefits to plan, and that is a massive potential for negative consequences.  Anyone who believes they, or their loved one, may need Medicaid, the time to think about this is as early as possible. This is a topic you should discuss with your Certified Financial Planner and/or Elder Law or Medicaid Law Attorney.

When One Partner Dies
I’ve seen online posts where the question about what to do if marriages are invalidated, and many people will mention “a will.” Heads up! A will is important, and it is on the list of necessary documents, and in my humble opinion, it is lower on the list of necessary documents. We are talking about losing essential rights, and that raises the need for as strong a protection as possible. Wills can be easily contested, and other mechanisms are stronger in terms of directing assets. The Essential Documents List

  1. Make sure you have financial and medical durable Powers of Attorney and HIPAA forms.
  2. All bank accounts, investment accounts, etc. should have beneficiaries designated by Payable on Death (POD) or Transfer on Death (TOD) - these things supersede a will (meaning their instruction overrides the will)!
  3. If there's ANY concern about unwelcome family members trying to claim the assets that you want to go elsewhere, then a trust should be considered. There are many kinds of trusts and they need to be set up properly based on what needs to be protected, how, and from whom. This should be discussed with a family law attorney and with your Certified Financial Planner. 
  4. Real estate and other property titles should be reviewed. Be sure to know the probate and tax implications! Tenants in Common and JTWROS are NOT the same thing!!
  5. Update beneficiaries on insurance and 401ks and IRAs. As with TOD/POD, these supersede a will (meaning, if there's a conflict, the beneficiary form wins)
  6. Tie up all the loose ends with a will and be sure to "bulletproof" it. Ask your attorney how to bulletproof the will. If your attorney does not understand what it means to bulletproof a will, find a new attorney.

Being Sure Our Wishes will be Respected

In the pre-Marriage Equality days, and let's be blunt, even today, there have been times when our relationships were not respected or even ignored. This has happened in the most crucial emergency situations. We still need to be sure that the rights and authorities that our legal ties give us are respected. This means having immediate access to your legal documents. It also means that other people can access those things in an emergency situation. 

If there is an accident, and either both spouses are incapacitated, or one partner cannot be reached, then having those legal documents doesn't help very much. Emergency personnel and medical staff need to understand your directives as fast as possible. Some states (such as NC) have a Secretary of State registry for health care directives. There's also a national Living Will registry, though it is not a government regulated site. There are also paid services, such as DocuBank, which provides a wallet card with emergency information printed directly on it that provides access to a website where emergency personnel can access the documents you've designated as public. (Note: I can offer registration to DocuBank at a steeply discounted rate. I receive no benefit or compensation from that. It's simply a service that I believe is valuable and important and so I offer it.) 

This is a lot of information. 

Steps Everyone Should Take -- The Short List

  • To protect your children, talk to a Family Law attorney
  • Review the beneficiaries on any employer benefit, life insurance, IRA, etc.
  • Make sure investment accounts, bank accounts, etc. have a POD or TOD
  • We can’t assume Congress will act on revising the Estate Tax limits. If you have an estate near or in excess of $6 million, you may want to consider a plan to address estate tax, such as a life insurance policy in an ILIT, a Life Insurance Trust. This is a complex matter and explanation, too much for this article. Just know that if you have a net worth of $6 million or more, it’s time to meet with your Certified Financial Planner. (today, the estate tax limit is significantly higher than $6 million. That is set to expire at the end of 2025. There are no guarantees in terms of what will happen then.)
  • Make sure you have all of the documents on The Essentials List. No, no, no, please do not use online fill-in-the-blank services for this. Especially if marriage equality is rescinded, you need a Family Law Attorney who specializes in working with LGBT people and especially unmarried people. 
  • If marriage equality is rescinded, you may feel more protected if there’s a means to ensure your legal documents are always with you and/or available to medical professionals in the event of accident, especially when you’re out of the area that you live in. You should consider registering documents with the Secretary of State (if in NC), or a DocuBank account.

The Essential Documents List

  • Durable power of attorney for finances/property 
  • Health Care power or attorney (or health care proxy)
  • HIPAA Privacy Authorization Form
  • Health Care Directive & Living Will
  • Any adoption paperwork
  • POD/TOD on any financial accounts; review beneficiaries on employer benefits
  • Will or Trust
  • DocuBank and/or Secretary of State Registry and/or Living Will Registry
     

As always, if you have any questions, please reach out. Consultations are available at no charge. 

Frank Summers, Certified Financial Planner™, and this is the #SpillTheTeaonLGBTFinances series. I work with clients across the US, and am physically located in Charlotte, NC. You can reach me at 704-717-8900, Ext 115 or by email at frank.summers@ceterainvestors.com