Estate Planning and New York’s Marriage Equality Act
The enactment of New York’s Marriage Equality Act in 2011 presents same sex couples new and beneficial opportunities for estate planning and wealth preservation.
For couples in a long term relationship, there are several important steps that need to be taken, even if they decide not to marry. All couples need to update their health care proxies, living wills and powers of attorney. Without a properly executed health care proxy, an individual will not have access to their partner’s medical records, nor will he be able to make medical decisions for his partner if and when his partner is unable to make them on his own.
Similarly, in the event of incapacity or long-term hospitalization or rehabilitation, partners and spouses need a durable general power of attorney. Having these documents will alleviate stress and confusion in the event of a medical or life crisis. A power of attorney allows for continuation of business as usual in your banking and business affairs.
These basic documents are fundamental to all estate plans and should be executed regardless of the size of an individual’s estate. They are easy to prepare and execute and are just as easily revoked if circumstances in the relationship change.
Married couples as well as long term domestic partners wishing to leave assets to each other need to execute wills designating their spouse/partner as their beneficiary (assuming that is where you want your assets to go). Individuals may also wish to make other bequests in their wills, including gifts to family members, schools, and charities.
Couples with children will also want to designate guardians. If a couple adopted a child, they need to review who has legal custody and make changes if necessary. In a situation where an individual had the child prior to the marriage, adoption and guardianship considerations need additional review. Guardianship over a minor child is not a decision you want to leave to a Family Court or Surrogate’s Court Judge.
In New York, couples also need to consider how they take title to real estate. If property is acquired jointly as a married couple, that asset will pass by operation of law to one’s spouse and not fall under the provisions of a will. Depending on when an asset was acquired, couples may wish to re-title the asset by filing a new deed with the County Clerk. It is important for all individuals to have a will and avoid having their estates distributed based on the laws of intestacy.
For couples that are high income earners or high net worth, tax planning is an important consideration in any estate plan. While same sex married couples will not see any federal estate tax benefit as a result of their marriage, New York State’s estate tax marital deduction will apply. A great deal of tax planning will depend on how the President and Congress resolve the upcoming “fiscal cliff” and the resetting of many Bush era tax cuts. It is unlikely that the gift and estate tax exclusion will remain as high as it is now and the likelihood of a change in tax rates remains probable.
The use of irrevocable and revocable trusts will become even more important if current exclusions and rates change. Identifying assets to transfer together with ascertaining appropriate beneficiaries should be part of the planning process.
Individuals also need to review and check beneficiary designations on life insurance policies and retirement accounts. A conversation with a qualified estates attorney and financial advisor are strongly encouraged.