Getting your estate in order

Kevin J. Smith

Wealth management, retirement and legacy planning are challenges for everyone, but there are particular issues to consider in passing assets along to surviving partners, particularly for same-sex couples.

Your wishes most likely won’t be fulfilled unless you have legal documents in place that clearly direct that your partner will inherit some or all of your assets.

Ordinarily, husbands and wives may pass any amount of assets to the surviving spouse without being subject to federal taxes. That doesn’t apply to unmarried or same-sex couples under current laws. However, there are effective ways to achieve that outcome. More sophisticated planning is required if your estate – including life insurance benefits – exceeds $2 million. That is why estate planning is essential for same-sex couples with significant assets to preserve and direct.

It is important to think about whether, when one partner dies, there are essential legal documents in place to make sure the other partner inherits the intended assets. Take a close look at how your beneficiaries are named on important assets such as retirement plans. Many assets transfer to the beneficiaries named in the documents concerning those assets regardless of what your will says. Most people name beneficiaries when they establish a retirement account. Changes in household and family circumstances may call for you to review this information.

When unmarried parents, including same-sex couples, adopt a child, it may be possible for both to file as head of household and pay less in taxes – unlike married couples. Establishing trusts for your children can help you provide them with financial security in case anything should happen to you or your partner.

Trusts can be an effective way to avoid probate, to pass your assets on as you intend, and to keep matters private. Your financial advisor can work with you, your accountant and your attorney to guide you through the estate planning process and to ensure your values and your view of the future are reflected in the legal documents your attorney puts in place on your behalf.

Both you and your partner should have up-to-date living wills to express your wishes for end-of-life care as well as last wills and testaments. Unmarried couples also must consider having in place hospital visitation authorizations and healthcare proxies that allow your partner to make sensitive decisions on your behalf. You should have durable powers of attorney for finances and a domestic partnership agreement that spells out the contributions each of you makes to the relationship. Ask your attorney how to document your relationship most effectively.

Find a financial advisor you can trust to help shepherd you through the process. The Human Rights Campaign has given Wells Fargo Advisors a 100 percent grade for its fair-minded corporate policies and the equal treatment shown to all LGBT employees. Diversity Inc. magazine has named Wells Fargo & Company second on its list of “Top 10 Companies for LGBT Employees.”

Kevin J. Smith is a financial advisor and vice president at Wells Fargo Advisors in Green Bay.