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Estate Planning and Asset Protection for Same-Sex Couples

Posted on: August 11th, 2014
lgbt estate planningAs of this writing, only one state that our asset protection attorneys serve recognizes same-sex marriages. New York offers state-level protections for spouses, but in Tennessee, Florida and North Carolina, married same-sex couples must institute effective estate planning to get some of the protections that heterosexual married couples have automatically under state law.

Our lawyers have covered tax tips, retirement plans, and estate planning for married same-sex couples. Since last year’s Windsor court decision—affording federal recognition of same-sex marriages for tax purposes—couples have been navigating tax advantages and revising estate plans. From enjoying the unlimited marital deduction for federal estate and gift taxes, to filing revised returns for retroactive income tax savings and requesting health insurance premium refunds, married same-sex couples have more options for enjoying the legal entitlements already provided to traditional marriages.

What about spousal rights to real property, financial accounts, and other assets? When an individual wants to preserve their spouse’s interest in wealth that has accumulated over a lifetime, and state laws do not adequately provide in ways that are desired, a few tools can be use independently or collectively to protect assets:
Trusts. Challenging a Will is easier than contesting the terms of a trust. Unmarried and married LGBT couples can implement trusts in their estate plan. Assets paid outright to a spouse could be compromised by a lawsuit, creditor claim, or judgment. Assets in trust ensure preservation for the benefit of a spouse and/or children. In states like North Carolina, Florida, and Tennessee, where same-sex marriages are not currently recognized, property surviving same-sex spouse is not automatically entitled to any of the deceased spouse’s property. What about retirement assets? Trusts and properly designed beneficiary designation forms can appoint who will receive assets upon the death of the account owner, but to prevent creditor claims on transferred retirement assets—ask about an IRA beneficiary trust.

Limited Liability Companies (LLCs). LLCs offer creditor and lawsuit protections similar to trusts, however these have annual filing requirements. If not established and maintained properly, the protections could be lost. An asset protection attorney can review necessary documents and deadlines and advise whether this tool offers the most valuable protections.

Proper titles. As noted above, states that do not recognize same-sex marriages will not provide for spousal rights to real property owned by a deceased spouse. If a married LGBT couple does not use a trust to title their home(s), an attorney can review ways of titling real property, like joint tenants with right of survivorship. Real property titled this way automatically becomes the property of the surviving individual and avoids probate. How one holds title may affect taxation. Ask a tax attorney about capital gains and other tax implications that may arise from how you hold title. 
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