Estate planning for gay couples has become an important topic as the law begins to catch up with the dynamics of modern relationships. According to the Office for National Statistics, in 2017 there were more than 190,000 same sex families in the UK. An individual estate could include anything, from social media accounts through to property, finance and material possessions. So what’s different for those in LGBT relationships and how can you ensure that everyone’s interests are protected?
Civil partnerships and marriage
The law recognises the right of civil partners and married couples to inherit from one another, whether those couples are same sex or not. When it comes to estate planning for LGBT couples, the same issues arise as for opposite sex couples where no legal partnership is in place. Gay couples who are co-habiting have no automatic right to inherit from one another and inheritance is unlikely to be tax-free in the same way as it is when transferred between civil partners and married couples. For example, two people in a civil partnership will be able to inherit any money or property left by an other half without having to pay inheritance tax on it. For everyone else, the first £325,000 of an estate is tax-free but after that a charge of 40% can be applied. So, for many people the first step in estate planning for gay couples is to determine the status of the relationship to ensure that assets or property can be inherited in the most tax efficient way.
The importance of a Will
Estate planning for gay couples who are not married necessarily includes creating a Will. Even for those couples who have entered into a civil partnership or who are married, a Will can help to save a lot of confusion and hassle in the future. The purpose of the Will is to set out how an estate should be managed on death. It will need to be properly executed – dated and witnessed and signed by two independent adults. Any Will can cover the following:
– Bequests and assets. A Will provides the opportunity to ensure that the distribution of an individuals’ assets are in accordance with their wishes on death. Individual assets can be left to people or organisations and a “residue legacy” will essentially transfer everything left after specific bequests to a named beneficiary.
– Digital assets. Today, an estate may also be made up of digital assets such as social media accounts or music or film that has been purchased online. Estate planning for gay couples may include making provision in a Will for how these assets should be dealt with, including management or deletion of social media accounts.
– Pets. It’s possible to include instructions in a Will for who should care for any pets owned by the deceased. Financial resources can also be left to cover the cost of care for pets
– Funeral instructions. A Will should also contain the wishes of the deceased when it comes to the funeral. This could include whether to be cremated or buried, as well as preferences for the service. Although this part of the Will is not legally binding, it provides a good guideline for those left behind and ensures clarity on the deceased’s wishes.
Estate planning for LGBT couples – children
Wills can be used to secure the interests of children should something happen to one, or both, parents. Parental responsibility for children must be established before a guardian can be appointed in a Will. Only someone with parental responsibility can appoint a guardian. This automatically arises for the child’s mother (i.e. the woman who carried the child). The partner – whether male or female – who is not the legal mother may also have parental responsibility, depending on the marital status of the couple and how the child was conceived. A non-biological and non-adoptive parent won’t automatically become a child’s guardian if the other parent dies so it’s a good idea for couples nominate each other as Testamentary Guardian to avoid Children Act proceedings.
Estate planning for LGBT couples – property
Where property is owned by a single individual this can pass to a named beneficiary on death without any complications. If property is jointly owned then the situation will depend on how that property is held. For example:
- Where a property is owned by two people as joint tenants. If one person dies then the other’s share of the property automatically passes to the surviving joint tenant.
- Where a property is owned by two people as tenants in common. When one owner dies it’s possible for that person to leave their share of the property to someone else who then becomes a tenant in common with the other surviving owner.
As the way that property is held can have a very different outcome if one owner dies, estate planning for gay couples should include reevaluating any property ownership and changing holdings if necessary.
Claims under the Inheritance Act
Although not a reliable way to ensure estate planning for gay couples, if there is no Will a surviving partner in a cohabiting couple may be able to make a claim under the Inheritance Act. The right to claim arises where “reasonable financial provision” has not been made for a surviving partner by the deceased. For example, there may be no inheritance at all or just a small amount. Where this is the case, it may be possible to make a claim if:
- The couple were in a civil partnership
- The surviving individual is a former civil partner of the deceased and has not gone on to enter into another civil partnership
- For two years prior to the death the couple were cohabiting in the same household as civil partners
- The surviving partner was being maintained by the deceased immediately before they died
Today, estate planning for gay couples is fairly similar to that for opposite sex couples but some differences do remain. As for any type of estate planning it’s essential to be prepared and make provision for what should happen well in advance.