Gay Estate Planning – With an estimated 8 million adults within the USA identifying as gay, lesbian, bisexual or transgender, it is imperative that the facts are clear and that there is help and assistance available when considering the issue of gay estate planning.

Since the Supreme Court’s Ruling to make marriage legal for everyone across the whole of America, there has been an impact on the legislation regarding gay estate planning, which is quickly turning into traditional estate planning. Knowing exactly where you stand legally is of the utmost importance to you and your loved ones in case of the unexpected and at this point in time, there are several beneficial legal changes for same sex couples that you can use when thinking about your end-of-life plans and the arrangements for the division of your assets after- (Click here for a list of necessary documents) be smart and follow these guidelines to help you in your gay estate planning:

Maximize Your Company Retirement Plans

When one spouse dies, the other is now legally entitled to be the sole primary beneficiary of any qualified retirement plan (federal law states that this may be a 401(k); defined-contribution plan; defined benefit plan or Keogh plan for self-employed people, but not an IRA). They may therefore roll over the remaining plan to their own without having to take the minimum or lump-sum distributions until the year that the surviving spouse would usually take them (age 70.5 years in most cases). You now need your spouse’s written permission in order to name anyone else as a beneficiary for ERISA qualified retirement plans. Prior to retirement, employer benefits previously only available to heterosexual couples are now available to all married couples, and same-sex couples looking at gay estate planning should ensure that they are receiving the spousal benefits they are entitled to. To be on the safe side, always name your spouse as your primary beneficiary on your company’s beneficiary designation forms.

Ensure Your Parental Rights

Although a lot of the law has changed as a consequence of the Obergefell marriage ruling, one area where there is still contention is child guardianship. Depending on the State you reside in, you may not be regarded as the legal parent of a child even if you were married to their biological or adoptive parent. Second parent or step parent adoption is highly recommended in these cases to ensure the emotional, legal and financial security of the child and the upholding of the parental rights of the surviving spouse. Anthony Brown at Time For Families specialises in gay estate planning and family law and can help with any questions or concerns you may have about the legality of your parental status.

Take Advantage of Portability

Forbes goes into detail about this legal quirk along with ‘gift splitting’ in this article that was written after the Supreme Court declared the same-sex marriage ban unconstitutional:

This is the ability of widows and widowers to add the unused estate tax exclusion (now $5.43 million) of the spouse who died most recently to their own. The concept was introduced by the 2010 tax law (although the term was invented by tax experts and does not appear in the legislation). Portability was made permanent by the 2012 tax law.

To take advantage of portability, the executor handling the estate of the spouse who died will need to transfer the unused exclusion to the survivor, who can then use it to make lifetime gifts or pass assets through his or her estate. The prerequisite is filing an estate tax return when the first spouse dies, even if no tax is owed. This return is due nine months after death with a six-month extension allowed. If the executor doesn’t file the return or misses the deadline, the spouse loses the right to portability. (See this post, “The Deadline Every Married Person (And Financial Advisor) Needs To Know About.”)

Use Your Gift-Splitting Rights

 Currently, you can give up to $14,000 each year to as many recipients as you would like without incurring gift tax. Spouses can combine this annual exclusion–a process called gift-splitting–to jointly give $28,000 to any person tax-free. Spouses can gift-split by giving $14,000 each, $28,000 from a joint account or $28,000 from one of their individual accounts. These restrictions apply whether you make outright gifts to individuals or put the funds into trusts for their benefit.

Any gift that’s more than the annual exclusion counts against the lifetime gift tax exclusion – the amount that each individual can give away during life without triggering gift tax. Once you have passed the limit, which is currently $5.43 million, gift tax of up to 40% applies. Couples can also gift-split with their applicable exclusion amount and together transfer up to $10.5 million through lifetime gifts.

It is essential for those considering gay estate planning to research as much as they can on the issue. However, the information available can often be overwhelming or confusing, or you may not know what action to take once you have made decisions on these matter. For a reputable and trustworthy attorney in New York who can help with family and estate issues, call Anthony M. Brown, head of Nontraditional Family and Estates division of Albert W. Chianese & Associations, at 212-953-6447 or email questions to Brown@awclawyer.com.