Gay marriage is now legal in New York, and the subject of estate planning as it applies to same-sex couples has typically revolved around marriage. If you are in a committed relationship but you are not married, your partner would not enjoy certain rights that protect married couples.
For example, if you passed away without any estate plan at all and you were married, your spouse would be in line for an inheritance. On the other hand, if you were in an unmarried relationship, your partner would not be recognized under intestacy succession laws.
Utilization of Marital Deduction
We have a federal estate tax in place that carries a $5.34 million exclusion or credit. There is also a state-level estate tax in the state of New York. Until April of next year, the New York state estate tax exclusion is $2,062,500.
The exclusion is the amount that you can bequeath to others free of taxation. Anything that you transfer that is in excess of the exclusion amount is potentially taxable.
However, there is an unlimited marital estate tax deduction on the federal level and the state level. This allows you to leave unlimited resources to your spouse free of death taxes. Of course, if you are not legally married, this deduction cannot be used.
The state of New York recognized gay marriages before the federal government did so. For a while, the unlimited marital deduction was not extended on the federal level, even if you were legally married in the state of New York.
However, because of a relatively recent Supreme Court ruling, the federal government is now recognizing gay marriages as well. As a result, the federal marital deduction is available to all legally married people.
Is Planning Still Necessary?
Even though same-sex married couples currently enjoy the same rights as all other married couples, estate planning is still important. There are some base protections in place if you do not have an estate plan, but intestacy is not a very wise choice.
You should definitely take steps to facilitate smooth and efficient asset transfers to your heirs in accordance with your wishes. There are various different factors to consider, and you should understand your options and make informed decisions.
This is true if you are legally married, but it is certainly true if you are a member of the LGBT community who is still single.
Facilitation of efficient asset transfers is part of the equation, but you should also account for the possibility of incapacity. You can name hand-picked decision-makers to act on your behalf in the event of your incapacitation if you execute the appropriate legal documents.
Free Estate Planning Consultation
If you would like to discuss estate planning with a licensed attorney, our firm can help. We offer free consultations to people in and around Smithtown, and we are sensitive to the needs of the LGBT community. To request a consultation, send us a message through our contact page.