Don’t Go Unprotected Proxies, Wills and Trusts

Structuring the legal parts of any relationship is very important, and it’s particularly important for LGBTQ+ couples to do if they are not going to enter into a marriage. Even if you do get married, it’s smart to get all of these issues taken care of so you can go about living your life knowing that you’ve taken care of all this.

I once had a client who in a deposition was told that he was “disingenuous” by opposing counsel for considering the business and legal aspects of a same sex relationship where the couple did not marry. Of course, I objected to the inappropriate badgering, but the opposing lawyer was trying to make her self-serving opinion known that certain things should just be assumed when people are in a committed relationship, and her client was entitled to things not specifically designated. Aside from the fact that such assumptions won’t stand up in court should it come to that, the only way to make sure that your wishes will be honored is to formally memorialize them. Historically, the sad truth has been that in many LGBTQ+ relationships where no such protections existed, outside people have been able to force their wishes on a couple on anything from health care to inheritance. Even in today’s more liberal climate, those risks still exist. Bottom line: take care of yourself and your loved ones.

As you look at what applies to your situation, the first thing you should consider is a health care proxy, especially where no marriage exists. If you do not have this power, one partner can often be precluded from making any decisions concerning a partner’s health-related issues and possibly prevented from certain hospital visitations. When creating a health care proxy, you should consider other close relatives. There may also be children involved, particularly adult children, and those children may want to participate in these decisions. You can nominate several people and require that majority decisions be required unless it’s an emergency situation.

You should also consider creating a limited power of attorney where another person has the authority to make some kind of decisions regarding your financial situation. It’s important to create specific limits on the scope of that power, for example if it comes to real estate. Still, you may want to give that party some level of authority in the even that you are incapacitated.

You may or may not be surprised to learn that many people avoid making wills. Don’t make that mistake. You should be designating who will inherit what. It’s a relatively simple process, certainly compared to the mess that happens if you die intestate and the power to distribute your estate is taken completely out of your hands. If you have a partner, you can make a reciprocal will in which you can make specific bequests or simply designate a percentage of the residuary estate to any heirs.

Another device you can use for transferring your wealth are trust instruments. There are basically two kinds of trusts: revocable and irrevocable.

Revocable trusts are used to transfer wealth to circumvent the process of probate later on and also to divide up income. It’s a good device to transfer money, or even real estate, without transferring the principal. In other words, you can move your assets into a revocable trust and create a situation where the other party can live off those assets for the remainder of their life. And then, when that person dies, the asset can go to someone else. By being revocable, the party who created the trust can change the beneficiaries and remove assets any time they want. In that way, it’s like a will, which you can also freely alter. (How many murder mysteries have used that as a plot device?)

One of the disadvantages of a revocable trust is that your creditors can still get at those assets. The alternative is an irrevocable trust, which insulates you against your creditors, but it takes away your authority to make changes, including the beneficiaries. You are also prevented from making any decisions over the trust’s assets. That authority lies with the trustees who are separate persons. You can, however, be a trustee of a revocable trust.

The ultimate goal of all of this is your peace of mind as you live your life. Taking care of these issues helps give you as much control as possible. Yes, things will change, and that’s why it’s also a good idea to meet with your lawyer every year or so to review your decisions and see if there are changes you want to make. You may be surprised at how good it feels to know that you’ve done everything possible to protect yourself and your assets, and, most importantly, the people who are important to you.

—Tedd S. Levine, Esq.