Giving the Gift . . .
by Grace S. Yung, CFP
With the holidays upon us, it’s easy to get swept into the spirit of joy and giving. Yet, while most people don’t like to think about end-of-life issues, it is essential to ensure that a partner and other loved ones are taken care of going forward—which could be the best gift you will ever give them.
All LGBT individuals—regardless of whether they are single or married—should consider what would happen if they contract a terminal illness or have a fatal accident.
Why Final-Wishes Preplanning Matters
After one’s death, the body must be disposed of rather quickly. If you have not left written instructions with your wishes, most states give control to your closest legal relative—which means that in some instances a domestic partner could be excluded from making these important decisions.
Written instructions for the disposition of a body are legally binding. Your written instructions allow you to state your final wishes, as well as to name a particular individual (or individuals) to carry them out.
Likewise, the disposition of your assets can be a major hurdle—especially if your family does not approve of same-sex relationships. Therefore, it is essential that your wishes for who inherits what are made crystal clear.
There are various alternatives available for end-of-life planning, and each can help in different ways. Some of the most necessary planning includes:
• Creating a Will. Even if you are married or legally partnered, it is essential to have a written will. This will allow you to decide and make known how you want your property handled. One big advantage here is that wills are easy to create, so this planning tool should not be put off. In addition, a will allows you to leave property to anyone you wish, as there are no laws that prohibit you from leaving assets to a partner—or to anyone else of your choosing. This can truly help to ensure that the state doesn’t take over the distribution of your assets—especially if this would unintentionally disinherit your partner or others who are close to you.
• Documenting Wishes for Your Remains. In most states, a decedent’s next of kin will also have the right to make decisions regarding the disposition of remains if one had not made such wishes clear. Therefore, documenting your wishes regarding how you want your remains handled (including naming a final resting place) can help to ensure that your—and not your state’s—plan is carried out.
• Setting Up a Funeral Trust. Unless you choose a simple cremation, final burial expenses can be quite costly. Today, the average cost of a funeral with a casket can be in excess of $10,000. One way to alleviate this financial burden on a spouse or partner is to set up a funeral trust. Such trusts allow you to enter into a contract with a provider of funeral and cemetery services prior to death. The funds in the funeral trust can assure that money will be available at the time it is needed.
Additional Planning Considerations
Once you have completed the documentation that you need, there are other considerations to be mindful of. For example, contrary to what many people believe, a will is not the best place to document wishes for the disposition of remains. One reason for this is that a will is often not found and/or acted upon right away after a person’s death. Therefore, be sure to write this information in a separate document, and then sign and date it. This is especially important for those who anticipate any type of objection from a family member on this issue.
It is important to note that an arrangement such as a Durable Power of Attorney (POA) will not be effective in directing one’s funeral arrangements and the disposition of one’s remains. This is because the agent’s POA authority expires when the principal of the POA passes away.
The Results of Not Preplanning
In many states today, the law specifies that in the absence of a signed document, a person’s next of kin has the right to make decisions regarding a decedent’s funeral arrange-ments, as well as the disposition of the remains.
And without a will, you also run the risk that your partner or other loved ones’ lives could be drastically changed if they are faced with losing your income or assets that they count on for everyday survival.
Taking the Next Step
Planning for end-of-life needs can be done by an individual at any time, provided that he or she is considered competent. This information is not intended to be a substitute for specific individualized legal advice. When developing any type of final-wishes strategy, it is important to work with a professional who is well versed in the field of financial and end-of-life planning in the LGBT community. This way, you can be sure that all bases are covered in the proper manner and that your future wishes will be met.
Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston.
See other MoneySmart columns:
Preparing Financially… (November 2013)
For your “Next 50 Years”
Loved Ones in Need (October 2013)
The cost of caring for an aging family member
After the DOMA Ruling (September 2013)
Couples still need to watch for potential land mines.
Saying Goodbye to DOMA (August 2013 OutSmart)
What it really means.
Critical Illness Insurance (July 2013 OutSmart)
Filling in the gaps.
Implementation of Obamacare (June 2013 OutSmart)
How LGBTs can prepare.
The Aging Population (May 2013 OutSmart)
How LGBTs folks can prepare for living longer.
Staying on Top of the Fiscal Cliff (April 2013 OutSmart)
How to maximize your investments, even if your paycheck is smaller
Finding the Funds …to make your IRA contribution (March 2013 OutSmart)
Have You Made Your 2012 IRA Contribution Yet? (February 2013 OutSmart)
There is still time!
What’s Different for 2013? (January 2013 OutSmart)
Considerations for Texas and your future investments.
LGBT Partners… (December 2012 OutSmart)
Working around the denial of your government benefits
Future Tax Rules Can Further Penalize LGBT Investors (November 2012 OutSmart)
But there is still time to act
Protecting your Wallet and your Heart (October 2012 OutSmart)
How and when to keep assets separate—even when you’re madly in love
Domestic Partner Tax Deductions in Home Ownership (September 2012 OutSmart)
With today’s historically low interest rates, it’s certainly a great time to either purchase or refinance a home.
Dying Intestate (August 2012 OutSmart)
Could you be leaving the state in charge of distributing your assets?
Protecting the Things that Matter (July 2012 OutSmart)
How those in the LGBT community can use life insurance planning strategies
When ‘I Do’ Becomes ‘I Don’t Anymore’ (June 2012 OutSmart)
Ensuring both partners’ fair share with a Domestic Partnership Agreement
Retirement (May 2012 OutSmart)
Using annuities can provide lasting income for both domestic partners: When depending on a partner’s retirement income, annuities can offer the perfect solution
Financial and Tax Planning Issues for Domestic Partners (April 2012 OutSmart)
Is Uncle Sam getting a bigger chunk of your income and wealth?
The Real Cost of Long-term Care (February 2012 OutSmart)
How LGBT caregivers are paying the price
Gay Money Matters (part 1) (February 2010 OutSmart)
Domestic Partners: Estate and Tax Planning
Gay Money Matters (part 2) (February 2010 OutSmart)
Protecting your assets . . . even when the rules don’t