Planning for “LEGAL STRANGERS” – Part 2 By Christina Mae Olson, CFP®
Same sex couples may now get legally married in many countries: Belgium, Canada, Netherlands, Norway, South Africa, Spain and Sweden. In the US it is now legal in Massachusetts and Connecticut and Iowa. Dozens of other countries legally authorize domestic partners or civil unions. If you get legally married in one of these places then your marriage will also be recognized in Aruba, France, Israel, and some places in the US (New York, Washington DC, Massachusetts, Rhode Island, Vermont and Connecticut).
My partner, Michelle, and I have decided to get married in Black Hawk County, Iowa. We know full well that if we decide to stay in Wisconsin this marriage won’t net us any financial gain. I feel, however, that our marriage will carry symbolic weight for future legislatures here when discussing human rights and equal rights issues. I will happily and proudly display our marriage license knowing that some governing body thought we were as equally deserving as straight couples to be legally married. Many good things will come from our marriage. I hope that one would be the reversal of the Wisconsin marriage statute that renders a marriage in Iowa illegal. I hope we won’t be fined $10,000 under the statute or have to serve 90 days in jail just because we get married elsewhere.
Married or not, we are “legal strangers” in the eyes of the law in Wisconsin. Last month I wrote about various legal documents that couples need to protect themselves and their assets: PARTNERSHIP AGREEMENTS, POWERS OF ATTORNEY (DURABLE AND HEALTH CARE) and LIVING WILLS.
Here are some other legally enforceable ways you can protect yourselves:
- POD designation – this is for bank accounts and other investment accounts. This means “payable on death” (can also be TOD or ‘transfer on death”). This designation means your account balance will move immediately to your designee at your death – bypassing probate. Your funds are under your 100% control while you are alive but pass directly to your POD or TOD when you die. Naming a beneficiary on your accounts and policies, if available, will also allow your assets to pass to whomever you please outside of the probate process.
- Insurance – you won’t be able to pass your assets freely to your partner without paying estate taxes or even capital gain taxes on appreciated property. Life insurance can help pay the difference so you won’t have to sell the property to come up with these taxes when your partner dies and leaves you his/her estate.
- JTWROS – “Joint Tenants with Rights of Survivorship.” This is a great way to title property as a couple. You each own 100% of the property under JTWROS. Be careful that you aren’t down as “tenants in common” as this means you each own a specific percentage of your property (50% - 50%, for example). If you are joint tenants and one of you dies – your partner’s 50% would go to their legal heirs and not you! You don’t want to find yourself arguing with an “in-law” that wants to sell their 50% of your house once your partner dies!
- Wills. You must have a will – if you want to give property to your partner (or someone other than your blood related family) when you die. The wishes you lay out in your will trump any law that might contradict it. Without a will, your things will be divided up by state law – and go to your parents, siblings, children, aunts and uncles and cousins. If you want all of your things to go to your lover then the best way to make that happen is to leave it all to her/him in your will. Please have a lawyer draw up your will. NOTE: remember to revise your will if you split up with your partner!
- Second parent adoption. This has been done in Wisconsin. Consult with your lawyer. Two legal parents are better than one. You can also have a legal “guardianship agreement” or “shared custody agreement” drawn up to show your intent to have your children raised by both of you.
- Disposition of Final Remains. If you want a particular (non-relative) person to have the decision making power over what to do with your body when you die (cremation versus burial, for example) you can complete this form: http://www.funerals.org/attachments/125_WIDesigAgent.pdf. It will allow you to name your partner as the one who carries out your wishes after you die. Remember that powers of attorney die with you. Your personal representative on your POA’s cannot make decisions about your body after you die.
Lambda Legal – http://www.lambdalegal.org – has wonderful tools for learning more about these things. You can request the TAKE THE POWER – TOOLS FOR LIFE AND FINANCIAL PLANNING booklet from them. Their Midwest Regional office is in Chicago: 312-763-4413. You can also call their help desk toll free at 866-542-8336 for more information about protecting yourselves, your children and your assets.
Chris Olson is a licensed financial planner with a fee-only practice. You may contact her at CMOney@centurytel.net or 608-525-9818.
If you have comments on this article, please send them to Chris at the email address above, NOT to the LGBT Newsletter.