Marriage Equality and Estate Planning

“No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were.” Thanks to the June 2015 Supreme Court ruling in Obergefell vs. Hodges, which legalized same-sex marriage in all 50 states, same-sex couples are no longer “condemned to live in loneliness, excluded from one of civilization’s oldest institutions,” as Justice Kennedy wrote in the majority opinion. They are now eligible for all the same financial and legal benefits as their heterosexual counterparts. In many cases, this may mean that same-sex couples need to reevaluate any estate planning and financial planning which was put in place prior to the ruling. In other cases, newly-married same-sex couples may need to consider for the first time their financial and legal rights and responsibilities toward one another and consider creating sound estate planning documents to meet their unique wishes.

Prior to the ruling, elder law attorneys and financial planners often had to create unusually complicated legal documents for same-sex clients to grant them rights and privileges similar to those enjoyed by their heterosexual counterparts. For instance, estate planning documents might have been written to explicitly afford a same-sex partner hospital visitation rights or the right to make financial or medical decisions on behalf of an incapacitated partner. Normally these rights would have been routinely offered to a heterosexual spouse. In light of the Supreme Court ruling, complicated language which previously ensured the maximum possible rights or privileges may now create confusion or conflict in some circumstances. In addition, new beneficiary designations may need to be added to some documents, and couples may need to consider establishing trusts or using other financial planning strategies and protections afforded to married couples to meet their financial goals in the event that one spouse passes away and the other spouse inherits the estate. Same-sex couples who established their estate plans prior to the ruling should take time to review their estate plans and decide if the documents need to be updated.

Couples who were previously unable to marry and who have not already created their estate plans also need to consider how estate planning can help them to meet their goals in terms of both finances and health care. Since the surviving spouse will now automatically inherit their husband or wife’s estate, both partners need to be aware of the tax implications. Some legal and financial planning strategies, such as certain kinds of trusts, are available to ensure that inherited money or property does not disqualify a surviving spouse from public benefits programs such as Medicaid. Also, since married partners are now afforded rights such as hospital visitation or decision-making in the event that one spouse is incapacitated, couples should discuss their specific wishes and make sure that they have an Advance Directive and/or Living Will in place. If for any reason one spouse does not want the other to make financial or health care decisions for him/herself (for instance, in a case where one partner suffers from dementia), he or she should work with a qualified attorney to develop documents which make that decision explicit and designate an alternative agent to act.

Estate planning has become much less complicated for both attorneys and clients in light of the Supreme Court decision. But because of the changes for couples living in states which previously did not recognize their right to marry, it is especially important for same-sex couples to seriously consider estate planning and to make sure the estate plan they have in place accurately represents their individual goals and their goals as a married couple.