Estate Planning for Same-sex Partners

Back in the days of old TV shows like Leave it to Beaver, The Donna Reed Show, and Father Knows Best, people only saw romantic relationships between a man and a woman. But now, things have changed a lot and many people accept and support gay and lesbian couples. However, the laws about leaving property and money to a same-sex partner are still behind the times. Only a few states allow same-sex couples to get married, and even some of those states only give them some of the same rights as married straight couples. It’s a tough situation, but some states are working to change the laws to make things more fair for everyone. In 1996, the Defense of Marriage Act (DOMA) was passed, defining marriage as only between a man and a woman. This law prevents same-sex couples from accessing federal benefits. There have been legal challenges to DOMA, including a recent decision in Massachusetts declaring it unconstitutional. The Senate Judiciary Committee has also tried to repeal DOMA, but a lack of bipartisan support makes its passing unlikely. Additionally, a California court has refused to dismiss a challenge to a law excluding same-sex domestic partners from long-term care insurance plans. These legal battles continue to determine the rights of same-sex couples at the federal level. TL;DR Same-sex marriages are not recognized in Florida, even if they are valid in another state. This means same-sex couples miss out on certain benefits, like being able to file joint tax returns or qualify for the federal estate and gift tax marital deduction. This can result in same-sex couples paying more in taxes and their children receiving less inheritance compared to opposite-sex couples. If one spouse in a marriage with a traditional man and woman dies, the other spouse can take over their retirement account and delay taking money out. But if one spouse in a marriage with two men or two women dies, the surviving spouse has to start taking money out right away. Also, in a traditional marriage, if one spouse doesn’t use up all their tax exemption when they die, the other spouse can use it. But in a marriage with two men or two women, the surviving spouse can’t use the unused tax exemption. In Florida, married couples have special rights and protections for their property, like owning it together as “tenancy by the entireties” and getting benefits for their home. But because Florida doesn’t recognize same-sex marriage, same-sex couples can’t get these benefits. This means they may not get the same protections for their property or be able to share gifts in the same way as married couples. After the death of a spouse, a surviving same-sex spouse does not have the same access to government benefits as heterosexual couples. However, there are ways for same-sex couples to plan their estate to minimize federal taxes and ensure assets pass to the surviving partner. Basic techniques include giving gifts each year within certain limits to minimize taxes, but the downside is that the partner receiving the gifts will have full control of the assets. One way for same-sex couples to plan for their assets is to title them as Joint Tenants with Right of Survivorship (JTWROS). This means that if one partner dies, the property automatically goes to the other partner without going through probate. Another way to plan is to use a gifting trust, which allows the person giving the property to still have some control over it. This can help with taxes and make sure the property goes to the right person after the relationship ends or someone dies. Advanced planning techniques for same-sex couples include using a grantor retained income trust (GRIT) to transfer assets to the next generation at a discounted tax rate. This technique allows for the transfer of any asset, not just a personal residence, and can result in significant tax savings. For example, a 50-year-old individual could transfer $1 million into a 15-year GRIT and only be taxed on the remainder interest, which could be less than 50% of the initial transfer value. A grantor retained annuity trust (GRAT) is like a trust where someone puts property in and gets regular payments back for a set amount of time. After that, the rest of the property goes to the beneficiaries without being taxed. This can be a good way for same-sex couples to pass on wealth. Another option is a charitable trust, where someone can give money to a charity while still getting some benefit from it during their lifetime. This can help them save on taxes and make sure their wealth goes where they want it to. If same-sex partners want to make sure they are taken care of if their relationship ends, they should consider creating a domestic partner agreement (DPA), which outlines how they will divide their property and if one partner will provide financial support to the other. They should also consider adoption as a way to ensure their partner receives their property after they pass away. Besides basic estate planning documents, they should consider a living will and a durable power of attorney. For same-sex couples, it’s important to have legal documents in place to protect their rights. This includes a hospital visitation authorization form and a burial cremation affidavit. These documents ensure that the surviving partner has the right to visit their partner in the hospital and claim their remains after they pass away. The laws around same-sex couples’ rights are changing, but it’s still important to have these legal protections in place.

Source: https://www.floridabar.org/the-florida-bar-journal/estate-planning-for-same-sex-partners/