Beneficiary designations are legally binding documents and supersede whatever is written in your will, Ohio attorney Joan Burda points out. For same-sex couples, proper estate planning and beneficiary designations are potentially more critical, she says.
For all individuals, naming beneficiaries is one of the simplest and most direct ways to efficiently get assets into the hands of loved ones after your death. as Franklin Templeton explains. With same-sex couples, however, there may be a lot of dynamics going on with family members who do not accept them; children who have been adopted by a same-sex couple, and family members may challenge custody arrangements after one of the couple has died, observes John McManus, who specializes in working with LGBTQ clients.
For all clients, as we know at Geyer law, beneficiary designations represent a topic to be discussed at length – and in depth. The process, our clients have learned. involves far more than just filling in blanks with names.
The 2015 Supreme Court case legalizing same sex marriages opened up opportunities for gay and lesbian couples, but taking advantage of those opportunities requires thoughtful planning and expert legal guidance. The checklist of matters to discuss might include:
- claiming the unlimited marital exemption for federal estate and gift taxes
- rollover from a retirement account to the surviving spouse’s account (without a lump sum distribution)
- gift-splitting to reduce estate size
- revisiting beneficiary designations to ensure that beneficiary designation on retirement plans reflect that someone may now be a spouse rather than a partner to take advantage of IRA rollover rules
(At Geyer Law, while we do not offer tax advice, we collaborate with our clients’ tax advisors in arriving at a coordinated plan.)
On the negative side, unmarried same-sex couples are at a disadvantage when it comes to the survivor maintaining his/her standard of living, Joseph Kapp and Nicholas Burkholder write in AARP.org (because they are perhaps not eligible for Social security or pension survivorship benefits.) Unmarried couples will still need to provide for one another in their respective estate planning to ensure assets pass to their partner effectively, and that they can make decisions for each other for finances and health care.
– by Rebecca W. Geyer