June marks Pride Month, a time to celebrate the diversity, strength, and resilience of the LGBTQ+ community. While we honour the progress made toward equality, it's also important to highlight unique considerations in legal and financial planning for LGBTQ+ individuals and couples. Proper estate planning can help ensure that your wishes are honoured, your loved ones are protected, and your assets are distributed according to your intentions.
The Importance of Will Writing during Pride Month (and beyond)
Writing a Will is crucial for everyone, but it holds particular importance for the LGBTQ+ community. Without a valid Will, your estate will be distributed according to the intestacy rules, which may not reflect your wishes, especially if you're in a more modern non-traditional family structure.
Cohabiting families, no matter their makeup, face the same inheritance challenges. One key thing to remember is that cohabiting partners don't automatically inherit assets in their partner’s sole name. That's why it's so important to have a proper Will in place. This ensures the surviving partner is taken care of and avoids the need for court applications for financial provision. A Will also allows you to:
Designate Beneficiaries:Â Clearly name your beneficiaries to ensure that your partner, chosen family members, or friends receive the inheritance you intend for them.
Appoint an Executor:Â Choose a trustworthy person to execute your will. This person will ensure your assets are distributed according to your instructions.
Guardianship of Children:Â If you have children, appoint guardians in your will. This is especially crucial for LGBTQ+ parents to ensure their children are cared for by the person or people they trust. If one partner does not have parental responsibility, they cannot appoint a guardian for the child. However, if the couple wants the partner without parental responsibility to care for the child after the death of the responsible parent, that parent can appoint their partner as guardian in their Will. This will grant parental responsibility to the guardian when the Will takes effect, provided the child is under eighteen at that time.
Considerations for Couples
For LGBTQ+ couples, especially those who are not legally married or in a civil partnership, estate planning is essential to protect your partner's rights and ensure they inherit your estate without unnecessary legal challenges.
Joint Tenancy:Â Consider holding significant assets, such as your home, in joint tenancy with the right of survivorship. This means the surviving partner automatically inherits the property without it being subject to probate.
Healthcare Directives:Â Draft healthcare directives and powers of attorney to ensure your partner can make medical and financial decisions on your behalf if you become incapacitated.
Civil Partnership or Marriage:Â Legally formalising your relationship can provide additional protections and simplify the inheritance process, as well as provide taxation benefits.
Addressing Unique Family Dynamics
The LGBTQ+ community often forms diverse and non-traditional family units. Proper estate planning can ensure that these unique family structures are respected.
Non-Biological Children:Â Ensure that your non-biological or adopted children are included in your estate plan to protect their inheritance rights.
Estranged Family Members:Â If you have estranged family members who you do not wish to inherit from your estate, a clearly defined will can prevent them from claiming a share.
Chosen Family:Â Explicitly name chosen family members and friends as beneficiaries if you wish them to inherit from your estate.
Trusts and Tax Considerations
Creating trusts can offer additional protection and control over your assets, especially for those with more complex financial situations.
Living Trusts:Â A living trust can help avoid probate, protect your privacy, and ensure a smooth transition of assets.
Tax Planning:Â Work with an estate planning professional to navigate potential tax implications and maximise the inheritance for your loved ones.
When it comes to Inheritance Tax, cohabiting couples don't receive the same concessions as married couples or civil partners. The first £325,000 (the nil rate band) of an estate is tax-free, but anything above that is taxed at 40%. Cohabiting partners cannot transfer their unused nil rate band between them. To address this, it might be worth considering discretionary trusts. This way, a surviving partner can benefit from the estate without the assets being part of their own estate, potentially avoiding double taxation.
All couples who are married or in a civil partnership enjoy equal inheritance rights. This includes the right to inherit a portion of their spouse or partner’s estate if they pass away without a Will, and the ability to leave assets to their spouse or partner free from any inheritance tax liability.
Inheritance and Gender Recognition
Since 2004, individuals can apply for a gender recognition certificate, which legally acknowledges their gender change. Sometimes, a Will might specify a gift based on the recipient's gender (like leaving £5000 to each nephew). If the Will was made before 4 April 2005, a beneficiary who has changed their gender can still receive the gift as intended. For Wills made after 4 April 2005, the change of gender might affect how the estate is distributed. However, the court can adjust the distribution to ensure the beneficiary receives their intended gift.
Seek Professional Guidance
Given the unique considerations and legal complexities, it's wise to consult with a Will Writer and estate planning specialist who understands the specific needs of the LGBTQ+ community. They can help ensure that your documents are legally sound and accurately reflect your wishes.
Conclusion
Estate planning is a critical step in securing your future and protecting the rights of your loved ones. As we celebrate Pride Month, take the time to review and update your estate plan to reflect your unique circumstances and wishes. By doing so, you can provide peace of mind for yourself and those you care about most.
At Toucan Law, we are dedicated to supporting the LGBTQ+ community with personalised estate planning services. Contact us today to learn more about how we can help you create a comprehensive and inclusive estate plan.
Happy Pride Month! 🌈
Comments