by Justin Fauci
Financial planning can be difficult for anyone—and for same-sex couples, it can be even more complicated. However, with a little foresight and the right information, same-sex partners can properly plan so that they and their children are prepared for major life events.
Start by asking the difficult 'what if' questions: Can I protect income and assets for my partner and myself? How can my partner receive income if he or she is ineligible to receive my pension benefits? What steps should I take to protect my partner or myself if one of us is hospitalized? The best way to start answering these questions is to create a financial plan to address your long-term needs and goals. That plan should encompass most, or all, of the elements below.
Make a will. A will and/or a trust confirming your intentions can help ensure that your assets are distributed as you desire. If you die without a will, intestacy laws will not leave your assets to an unrelated partner.
Designate beneficiaries. Many assets, such as life insurance, 401 ( k ) s and individual retirement accounts, are transferred according to beneficiary designations and typically are not subject to probate. Thus, same-sex couples may wish to list each other as beneficiaries on individual accounts and policies.
Make a property agreement. If you are going to pool money, share assets, financially support each other and incur debt together, consider creating a property agreement or joint tenancy agreement in order to address the possibilities of death or separation.
Make a durable power of attorney. A power of attorney gives a person financial authority to act on your behalf. You may wish to give someone that power in case you become incapacitated.
Make a healthcare proxy and living will. Often, in medical emergencies, hospitals and doctors do not recognize a same-sex partner as a family member. Therefore, you may wish to have a health care proxy, which designates an agent ( such as your partner ) to make medical decisions for you in the event of your incapacity. The living will outlines a person's wishes with regard to feeding and other life-sustaining measures.
Designate a POD/TOD beneficiary. A number of states have payable-on-death ( POD ) or transfer-on-death ( TOD ) laws. A POD/TOD beneficiary designation lets you transfer bank accounts, securities, securities accounts and other property at death without probate.
Make a joint custody agreement. Currently, 17 states allow second-parent adoptions. If your state isn't one, a joint custody agreement should be considered in order to ensure a partner's rights to see a deceased partner's child.
Special planning is necessary for same-sex partnerships. A financial consultant can work with your attorneys and other specialists to help you create a plan that provides important rights and protections for you, your partner and your children.
Justin Fauci is a financial advisor with Smith Barney, 101 Park Avenue, New York, NY 10178. He may also be reached at 212-503-2348 or at justin.m.fauci@smithbarney.com .
