Estate Planning for Same-Sex Couples

For now it appears same-sex marriage is legal in California.  However, same-sex couples need to keep in mind that even though domestic partnerships or civil unions are recognized by some states -- California, Vermont, Connecticut, New Jersey, Maine and Hawaii -- and gay marriage is allowed in California and Massachusetts, you remain strangers in the eyes of the federal government.   

Given that the legality of same-sex unions may be overturned, it is important that a same-sex couple set forth their legal rights in legal documents, especially if the law changes and does not recognize their unions.

Here's a basic list that same-sex partners should have:

1.  Wills and/or revocable living trusts and pour-over wills: Without a will or revocable trust, you risk having your assets pass to family members instead of your partner. It also allows you to name a guardian for minor children. A revocable living trust -- in which assets are titled to the trust and your trustee distributes your assets per your wishes after your death -- is considered more difficult to contest. A living trust also keeps your affairs private because it avoids probate, unlike a will, which becomes part of the public record. A living trust should be used with a pour-over will, which will cause any assets left out to "pour over" into the trust after you die.

2.  Advance health-care directive; health-care-authorization proxy; durable power of attorney for health care: Generally speaking, these documents appoint an agent -- your partner -- to make medical decisions on your behalf should you become incapacitated. They also will allow visitation, which can be denied unless you're a spouse or family member. This will also give your partner Health Insurance Portability and Accountability Act authorization, a document that will authorize your insurer to release medical information to your partner.

3.  Durable power of attorney for finances: This document designates an agent, whether it's your partner or an adviser who will keep your partner's interests in mind, to make financial decisions if you're incapacitated.

4.   Domestic partner agreement: Much like a prenuptial agreement for married couples, this document -- also called a living-together or property-sharing agreement -- spells out who gets what in the event of a split or death.

5.   Beneficiaries: Be sure to review your beneficiary designations on retirement accounts, stock options, life insurance and any other assets.

6.   Domestic-partner registration: In certain states, couples can register as domestic partners and will be afforded state spousal rights, such as the right to inherit without a will. But even if you can and do register, experts advise documenting everything, no matter what your status.

Because the law regarding same-sex couples is so controversial and subject to being overturned by higher courts, it is important to put everything in writing even if you are registered as domestic partners in order to protect your rights.  Otherwise, if laws change which no longer recognize your union, you will be stuck with your state's intestate designations with regard to your care in the event of incapacity and distribution of assets on your death.