- Preface
- Individuals and couples who are gay, lesbian,
bisexual or transgendered are not only wrestling with the usual
issues of life and money, but also have particular needs and
objectives. Perhaps by being a heterosexual husband and father
and yet having many close relatives, friends and clients who
are gay, I have a perspective which is detached enough to be
objective and realistic but yet close enough to be sensitive
and fair. My expertise in these matters is from serving hundreds
of clients as a financial advisor, CPA, registered investment
representative and advisor, accredited estate planner and insurance
agent.
- Be careful to evaluate the laws in your particular
state. It is very important to stay on top of current developments.
For example, the state of Vermont passed the Act Relating to
Civil Unions effective 7/1/2000 which allows gay couples to join
in civil unions similar to marriage. In May 2002, New York passed
rules allowing more aid to victims of the Wall Trade Center attack.
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- A. Know the benefits to which you are entitled, and develop
strategies to make up any gaps.
The country has changed a lot in the past few years. Many federal,
state and local agencies allow various governmental benefits
to same-sex partnerships and homosexuals not in relationship.
Also, many employers, large and small, no longer discriminate
in workplace benefits and rights.
- There are many excellent resources for the
gay community. It is wise to use them to (a) find out companies
and businesses who are more gay-friendly with insurance coverage
and retirement plan coverage (b) research health insurance plans
and also other insurances (c) find a financial advisor, attorney
or other professional you might need and (d) get information
with an additional perspective for the gay person.
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- A very informative and interactive website
to get information is www.hrc.org (relating to human rights campaign).
By entering the name of an employer, you can get for hundreds
of large employers a summary of the domestic partner benefits
and a rating of how “friendly” is the employer and
its views and actions against discrimination. This is a very
useful resource when looking for a new employer for you or your
partner, and checking out your current employers. In addition,
there are many pages devoted to legal documents which you should
have prepared in various situations. The website is excellent,
well organized and also contains summaries of news items and
links to other resources.
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- B. Get more protection.
1. Gay partners should provide more protection to each other
in case either party dies by getting more term life insurance
or becomes disabled by getting more disability-related insurance
(e.g. traditional disability insurance, long-term disability
insurance). Too often, there are not legal arrangements such
as wills or trusts which name the partner as beneficiary, and
without being so named, the surviving partner has no automatic
rights like for married couples. Wills are especially important
if children are involved. Living wills and health care proxies
are important too to specify the conditions and authority to
continue life support and other measures. See Section F.
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- 2. In the event one partner becomes incapacitated
(e.g. in a coma resulting from a severe car accident), the other
partner (or other designated parties) should be empowered to
carry on the financial affairs for the incapacitated partner
via:
a. a living trust document, and
b. a durable power of attorney (with perhaps a springing provision)
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- 3. Certain company health insurance policies
do not cover unmarried partners, and perhaps additional health
insurance is appropriate.
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- 4. Forms of lifetime arrangements to consider
are: (a) revocable trusts (b) gifts (c) co-ownership via joint
tenants with right of survivorship or as tenants in common (d)
beneficiary designations and (e) domestic partner agreements.
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- C. Minimize investment risks.
1. Gay partners are more vulnerable to separation, partly due
to the lack of the binding tie of children. Thus, each partner
should build their own asset base, and be less reliant on the
other partner (Also, many company retirement plans do not provide
retirement benefits for unmarried partners, such as same-sex
partners.). Smaller investment balances mean less risk should
be taken.
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- 2. Consider investments with protection of
principal such as (a) CDs and bonds with fixed maturities (b)
principal-guaranteed equity-related investments such as market-linked
CDs and indexed annuities).
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- 3. Keep separate accounts, and separately
pay expenses.
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- D. Handle special tax considerations.
1. An unmarried partner does not have an unlimited marital deduction
and thus might face a large estate tax upon the first death.
Get a financial advisor to help you.
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- 2. Strategies for separation are important.
For example, unmarried couples do not have the opportunity to
split IRAs using a domestic relations order (QDRO) and thus exchanges
are not tax-free.
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- 3. An unmarried couple may not file a joint
income tax return, and get some of the related benefits.
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- E. Be more stable in your business and careers.
Due to discrimination, there may be challenges for certain businesses
and for certain careers, and thus it may be appropriate to (a)
more carefully review choices, (b) more quickly identify changes
and (c) adopt certain strategies, and (d) more conservatively
plan.
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- F. Summaries of legal documents copied and excerpted from
the website for the Human Rights Campaign (on 6/4/2002) (Also
see Section A above for comments about this website). We suggest you visit www.hrc.org, and review the
site, and become a member. The site also contains articles and
sample documents.
- Also copied from the website:
Important note from HRC website
Please keep in mind that the sample legal documents provided
on HRC Foundation's FamilyNet are for informational purposes
only and may or may not be valid in your particular state. They
also may not include the particular provisions you need. We strongly
recommend that you consult a competent family or estate planning
attorney who is familiar with these issues. It is also important
that you understand that the information and sample legal documents
provided here in no way constitute, and should not be relied
upon, as legal advice.
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- 1. Will
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=128
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- A will is a document that details the distribution
of your money, belongings and property after your death. In the
document, you also name a "personal representative"
(commonly known as an "executor") to distribute your
property in accordance with your wishes.
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- A will is a complex legal document, and the
requirements vary from state to state. In many states, even a
minor technical mistake can invalidate your will. Therefore,
it is essential that you contact an attorney in your area for
advice on drafting a will that respects your wishes.
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- It also is important to know that the way
your assets are titled, and whether or not they are subject to
beneficiary or statutory designations, can completely alter the
plan established in your will. For this reason, too, it is important
to have an attorney review your situation and help you with your
will. The attorney can also advise you about any taxes that might
be due on your death, and whether they can be avoided by planning
ahead.
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- It is especially critical for gay, lesbian,
bisexual and transgendered people to have a valid will that expresses
their wishes. If a person dies without a valid will, a complex
set of state laws, known as intestacy laws, automatically direct
who will inherit your property beginning with your biological
family. Most state intestacy laws do not recognize domestic partner
relationships. This means that if you do not have a legally valid
will, your partner could end up with nothing or, worse yet, could
lose property he or she paid for due to an inability to demonstrate
ownership. Many states also have laws that require a person's
spouse to receive a portion of the spouse's estate automatically.
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- 2. Durable power of attorney for finances
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=107
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- A durable power of attorney for finances
allows you to appoint another person as your agent, and grant
him or her access to your money and other assets and the authority
to make financial decisions on your behalf if you become incapacitated.
Some examples of the powers you can give your agent are the powers
to:
- 1. Authorize payment of bills;
2. Run your business;
3. File your taxes;
4. Withdraw money from your checking or savings account;
5. Control your investments;
6. Sell your home;
7. Apply for insurance benefits on your behalf.
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- It is important to carefully choose a person
you trust to be named as your agent due to the enormity of financial
control you will give them. However, it should be noted that
you can limit the power given to your agent by detailing the
specific powers you are giving her/him in the durable power of
attorney for finances document.
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- It is critical for gay, lesbian, bisexual
and transgendered people to know if you do not create a durable
power of attorney for finances naming your partner or a friend
as agent no one will be able to manage your finances unless a
guardianship proceeding is filed in court, and your closest biological
family members will have priority of appointment.
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- 3. Health care proxy, or durable power of attorney for
health care
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=111
- A health care proxy, or durable power of
attorney for health care, allows you to designate another person
as your agent to make health care decisions on your behalf. If
a situation arises in which you are incapacitated and cannot
make medical decisions for yourself, a health care proxy instructs
doctors, nurses and others involved with your care that the person
you appointed as your agent is the person who you want making
care decisions on your behalf.
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- For example, a health care proxy can allow
you to give your agent the power to:
1. Be given first priority to visit you in the hospital;
2. Receive your personal property recovered by any hospital or
police agency at the time of your incapacitation; and
3. Authorize medical treatment and surgical procedures.
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- A health care proxy does not automatically
go into effect but, rather, comes into effect as specified in
the document. This condition varies from state to state but most
often, the document states that the proxy will come into effect
only when and if your doctor declares that you are incapacitated.
- It is especially critical for gay, lesbian,
bisexual and transgendered people to know that if you do not
create a health care proxy naming your partner or a friend as
your agent, the hospitals and courts will look to your closest
biological family member to make health care decisions for you,
and your partner or friend will have no legal right to make such
decisions. Also note that a health care proxy becomes ineffective
at your death and it is, therefore, critical that you also have
a will.
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- Because each state regulates the requirements
for a valid health care proxy in different ways, it is important
to know the requirements in your state. For copies of the forms
and instructions that apply in your state, visit Partnership
for Caring.
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- 4. Hospital visitation authorization
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=108
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- A hospital visitation authorization is a
document that instructs your doctor, care providers and hospital
staff about who is allowed and given priority to visit you if
you are hospitalized. Many hospitals only allow biological or
legal family members to visit a patient in the hospital unless
you have a hospital visit authorization.
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- Gay, lesbian, bisexual and transgendered
partners are not considered family under most state law. But
this document allows you to make clear that you want your partner
to have the right to visit you if you are hospitalized.
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- 5. Living Will
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=105
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- A living will (or medical directive) is a
document that instructs your doctor or care provider about your
preferences for life-saving procedures in the event that you
have a terminal condition or are incapacitated. For example,
you can decide whether you want your doctor to initiate life-sustaining
procedures such as CPR, administer artificial nutrition and hydration
or keep you as comfortable and free of pain as possible if you
have a terminal condition or are in a persistent vegetative state.
A living will is an important legal document because it communicates
your wishes and gives your loved ones guidance in making a very
difficult decision. It also is especially critical for gay, lesbian,
bisexual and transgendered people to know if you do not create
a living will expressing your wishes regarding life-sustaining
measures, it will be much more difficult for these measures to
be withheld or withdrawn and the hospital and the courts will
look to your closest biological family members to assist in making
these decisions.
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- A living will is different from the durable
power of attorney for health care because you are not appointing
someone to make life-sustaining decisions for you, but rather
leaving instructions for your doctor or care provider.
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- Because a living will is limited to terminal
situations, a living will should always be used in addition to
a durable power of attorney for health care and not as a substitute.
When you use a living will in conjunction with a durable power
of attorney for health care, these documents may be referred
to as advance directives. It should be noted that a living will
is not the same thing as a last will and testament.
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- Although a durable power of attorney for
health care appoints someone else to make health care decisions
for you when you are incapacitated, a hospital or court may still
require specific, written directions from you regarding the withholding
or withdrawal of life-sustaining measures. For this reason a
living will and a health care power of attorney should always
be completed.
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- Because each state regulates living wills
differently, it is import to know what the requirements for a
living will are in your state. For copies of the forms and instructions
that apply in your state, visit Partnership for Caring.
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- 6. Domestic Partnership Agreement
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=104
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- A domestic partnership agreement is a document
that explains the contractual legal rights and responsibilities
of each partner when a couple decides to form a long-term committed
relationship. Because at this time same-sex partners cannot legally
marry in any of the 50 states or the District of Columbia, a
domestic partnership agreement is an important legal document
for gay, lesbian, bisexual and transgendered couples.
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- For example, in your domestic partnership
agreement, you and your partner can determine:
1. Whether a particular piece of real or personal property is
owned jointly or belongs solely to one partner and how one or
both parties took title to that property;
2. Whether a gift or inheritance made to one partner is held
jointly or individually;
3. Who is responsible for household duties and chores;
4. How to share your income.
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- In the event of potential disputes or misunderstandings,
a domestic partnership agreement can help clarify ownership of
property, provide guidance for dividing property in the event
of a separation and specify a dispute resolution mechanism such
as arbitration. Because some states do not recognize the validity
of domestic partnership agreements, it is recommended that you
consult an attorney in your area.
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- 7. Co-parenting agreement
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=103
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- If you are a co-parent and want to have legal
parental rights and responsibilities for your partner's child,
a co-parenting agreement is a legal document that you can create
to clearly explain the rights and responsibilities of each parent
where a second-parent adoption is not available.
A second-parent adoption extends legal parental rights to the
non-biological or non-adoptive co-parent. However, some states'
laws not only restrict who may adopt a child but also ban second
parent adoption. To find out if second-parent adoptions are granted
in your state, see the FamilyNet second-parent adoption article.
If you and your partner do not have access to second-parent adoptions,
a co-parenting agreement may be your best legal option.
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- In the co-parenting agreement, you and your
partner can:
1. Agree to jointly and equally share parental responsibilities
by proving support and guidance to your child;
2. Authorize the other to consent to medical care for your child;
3. Devise a custody agreement before any separation should one
occur; 4. Stipulate that each partner will name the other partner
as the child's guardian in his/her will.
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- If you are the custodial parent, you can
stipulate in your will that you want your partner to become the
child's guardian in the event of your death. But this stipulation
is not legally binding in a court of law.
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- 8. Donor agreement
This info was copied from on 6/4/2002 from the website for the
Human Rights Campaign at the following URL address:
http://www.hrc.org/familynet/chapter.asp?article=112
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- When a woman finds a donor through a sperm
bank, she does not need a donor agreement. Typically called an
unknown or known donor, this man will have signed an agreement
with the sperm bank and surrendered any parental rights in the
process. As a result, the woman does not have to worry that this
man may later change his mind and try to claim that he is the
father and deserves visitation or even custody of the child.
Even if he does, there is little chance he will have any legal
ground to stand on.
In contrast, when a woman wishes to become pregnant through a
known donor, such as a friend or an acquaintance, there is a
greater risk that the donor may later claim a parental relationship
to the child. In such situations, attorneys highly recommend
that a woman consult an attorney and that both she and the prospective
donor sign a donor agreement before she begins the process of
donor insemination. This agreement is designed to define the
role and responsibilities, if any, the man will have with the
child.
Generally speaking, there are two types of donor agreements:
One that is used in counties or states where second-parent adoption
is available, and one in counties or states where second-parent
adoption is unavailable. Both forms are provided here with this
difference between them: Where second-parent adoption is available,
the agreement states that the donor agrees in advance to consent
to the adoption by the second or nonbiological lesbian parent
and agrees to the termination of all parental rights of his own.
(Some states allow the donor to have some diminished role in
the child's life, if requested and agreed upon.) Attorneys consider
this the preferred agreement if the choice is available to you.
To find out if second-parent adoption is available in your area,
see the FamilyNet second-parent adoption article.
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- Whichever form you use, it should be noted
that this area of the law is extremely fluid, and it is difficult
to predict whether a particular judge will honor such an agreement.
In some situations, for example, men who have signed such agreements
have later changed their minds, sought a parental role in the
children's lives and judges have granted it - essentially declaring
that they were the legal fathers, despite the agreement they
signed with the mothers.
You also should note that donor insemination laws vary from state
to state. For example, in some states, you are required to be
under the care of a physician. Your attorney can tell you if
this is required where you live.
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