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Financial Tips for Gay and Lesbian Partners
My client asks: "My partner, Sally, is moving into my house. I was planning to put her name on the title so that if anything happens to me, she and my daughter Margaret Anne are protected. Is this the smartest way for me to protect my family? What if I get sick, can she be my advocate?" Let's look at legal and financial tools that will really help protect your family.
1. Make a property agreement. If you put your partner on the title, you will be making an irrevocable gift. What if you break up? How will you get your property back? A smarter strategy is to do a property agreement. In it you can address every what if question. Relationships are about communication, so use the agreement to get to know each other.
2. Make a cohabitation agreement. If you are going to mix money, share assets, financially support each other and incur debt together, a living-together agreement will help. Family law varies from state to state; an attorney who specializes in gay family issues in your community is the person to talk to.
3. Give her durable power of attorney. If you are hospitalized, Sally cannot make any medical decisions for you unless you are prepared for a medical emergency. A properly drafted durable power of attorney for your state will enable each of you to make binding decisions for the other one. When you do a DPA, make sure it covers both health care and financial decisions. Keep it in your glove compartment and anywhere you go frequently. Do one for Margaret Anne. Every lesbian, gay, straight, single or married person should have one. Again, since laws differ and documents have different names, it is critical that you work with an attorney in your jurisdiction who knows same-sex and unmarried family law.
4. Designate her a POD beneficiary. A number of states have payable-on-death (POD) laws. If you die without a will, intestacy laws do not apply to you and Sally. A POD beneficiary designation lets you transfer investments and bank accounts at death without probate. It's free and easy. Ask your banker and broker.
5. Make a will. If you own your house jointly, don't assume that your partner will automatically receive it if you die. A greedy relative or a homophobic judge may block your intentions. A will and/or a revocable living trust confirming your intentions can help protect your family
6. Share child custody. Since you have a daughter, the best protection is two legal parents. As of now, seventeen states allow second-parent adoptions. If your state isn't one of them or you can't move to adopt in another state, consider a joint custody agreement. It's not as good, but it helps. Contact the National Center for Lesbian Rights at www.nclrights.org for guidance when it comes to children and your rights.
7. Review your disability insurance. More homes are lost to disability than death. Most group plans cover you up to 66 2/3% of your income. You can increase this to 75%-80% by purchasing additional disability insurance. Do a budget and see how much you will need, then ask how will you manage on one income for 2 to 5 years or longer. Don't forget to set money aside for retirement and college education during disability.
8. Consider life insurance. Life insurance products today offer tax-deferred accumulation in mutual fund type investments. Consider using a variable life or variable universal life policy to help save for Margaret Anne's college while protecting both of you. The best overall strategy is to do a financial plan, together, addressing your long-term goals and asking the difficult what if questions. Remember what Eisenhower said when he was Supreme Allied Commander: "Planning is everything, the plan is nothing."