Estate Planning Issues for Same-Sex Couples in Maryland

November 27, 2012

Estate Planning Issues for Same-Sex Couples in Maryland

Many states across the U.S. have brought same-sex marriage to a vote in recent elections, bringing to light the plight of unmarried same-sex couples who nonetheless consider themselves a cohesive family. Maryland recently voted to recognize same-sex marriage, becoming the first state in the union to vote for same-sex marriage.

While the issues surrounding same-sex marriage are myriad, one complication is estate planning. Many of the protections in place for married couples are not available to same-sex couples. Even gay couples legally married under state law may not have the same protections as traditional marriages, as federal law supersedes state law -- and federal law does not recognize same-sex marriage.

Every family needs estate planning. For same-sex families, however, that planning requires extra diligence. Common issues relevant to same-sex families are summarized below.

Distributing Assets

Absent a will or trust, the law does not grant assets to the surviving member of an unmarried couple, no matter the length of the relationship. In states that do not recognize same-sex marriage, this means that the default laws that protect spouses are absent, even if the couple has lived in the same house and shared goods and assets for years or decades. For example, if a shared house of the couple is in one name (as can often be the case when one member of a same-sex couple qualifies for a higher home loan) the other person is not protected, and family members of the deceased could swoop in and take the "marital home."

This is also true of assets accumulated together during the relationship. In order to protect the other half of a same-sex couple, each member needs to have a proper estate plan that clearly designates which property and assets should go to which person to avoid confusion and contention after death.

While a will is a public document, and some same-sex couples may prefer discretion, privacy can still be maintained by using a trust in lieu of a will; in fact, depending on circumstances, a trust can be more appropriate in any case, and can often be more difficult to contest than a will.

Handling Retirement Accounts

Besides a home, usually one of the biggest assets of any individual is his or her retirement account. However, inheriting retirement accounts can be confusing for tax purposes, and the rules are different for non-spouse beneficiaries who inherit retirement accounts.

The IRS does not recognize same-sex relationships. Thus, for retirement accounts like 401(k)s and IRAs, a same-sex couple must follow rules as if they are unmarried (even if they are married under state law). Essentially, this means the partner of the deceased must make minimum withdrawals after the account holder's death. A spouse, on the other hand, can rollover an IRA into his or her own IRA plan and not have to take minimum deductions until his or her own plan dictates it.

Caring for Minor Children

Same-sex couples are increasingly adopting children and expanding their family. Many states do not allow same-sex couples to share custody of a minor child. Maryland, however, does allow second-parent adoption for same-sex couples. However, that means each parent in the same-sex couple must individually adopt each child in the family.

Other Complications Exist

Same-sex relationships involve a variety of legal issues, estate planning among them. If you are in a same-sex relationship, contact a skilled estate planning attorney familiar with same-sex estate planning issues.

Article provided by Merrill, Cruttenden & Collinson, P.A.
Visit us at http://www.merrillaw.com