The Importance for the LGBT Community to Engage in Estate Planning…

It is just as important, if not more important, for

couples of the same gender to engage in estate planning.

I was talking with a CPA specializing in estate planning about the unique tax issues that arise in domestic relationships. Specifically, she expressed that couples of the same gender, unlike married couples, have no IRS exclusion for property or monetary transfers between them. Such transfers could be subject to gift tax and transfer tax. If there are significant assets involved in a separation betweencouples of the same gender, even if the financial provider wanted to be fair with property division, the tax consequences may be prohibitive. After the lifetime exclusion of 5 million, which may go back to 1 million, the excess will have a gift tax imposed. The maximum gift tax rate in 2012 is 35%, and it may be raised in later years. The gift tax rate is a hefty tax for anyone to pay.
To the extent you can address tax situations as well as protect your relationship, cohabitation/domestic partnership agreements are advisable. They are particularly beneficial in the following situations:

1. when a second person's name is added to a deed after considerable equity has already been established in the home during ownership by the first owner. The agreement will help clarify ownership interest in the real estate.

2. when property purchased jointly is only held in one person's name

3. when one person is the financial provider and the other is a homemaker

4. when unequal contributions are made towards the purchase of jointly held property

5. when there is an interest in giving benefits or rights to another that are not required or available under the law

6. when assets are co-mingled or combined

7. when there are family members who may dispute the interest of a domestic partner.
It is always wise to have an agreement between couples of the same gender. There are many situations that we can not anticipate, and having an agreement in place is always helpful.

Call me today if you have questions pertaining to Estate Planning for the LGBT Community