Annie Leibovitz: Estate Planning for Same-Sex Couples

No one wants to think ahead to their own death and what it means for the loved ones they’ve left behind.  But estate planning is an important and responsible thing to do. When married people purchase a home together, the law keeps tax from becoming a burden. They enjoy the benefit of their marriage in being able to share property, and give each other expensive gifts, without tax consequences.

Same-sex couples have no such privilege. The tax burden could be extreme, especially on an expensive gift or an attempt to add the other partner’s name to a bank account or property title. Financial planning and estate planning can help with these issues. Every benefit given to married couples must be acquired for same-sex couples through legal planning and paperwork. 

Annie Leibovitz and the tax

Same-sex couples do not have the same privileges as straight married couples when it comes to inheritance. If your partner passes away and leaves her estate to you, you have to pay up to 50 percent of the value of your inheritance in taxes. However, if you and your partner were recognized as a married couple, you wouldn't have to pay a dime...

When Sontag died in 2004, she bequeathed several properties to Leibovitz, who was forced to pony up half of their value to keep them.

When planning for same-sex couples, it is crucial that your counselor recognizes the distinctions between planning for married couples and planning for Civil Union couples and advise you accordingly.  If you have an existing Estate Plan, it is important to have those documents reviewed to ensure that they take advantage of the new State law and also take into account the inequalities of Federal Estate Tax laws. 

Estate Planning

Same-sex couples should use financial vehicles that allow beneficiaries or have “transfer-on-death” provisions such as mutual funds, IRAs, annuities and life insurance contracts that clearly state the surviving partner as the recipient of the property.  Particular care should be taken when titling your property.  Since federal law does not recognize same-sex marriage, assets that would not be taxes upon one partner’s death, do qualify for estate and gift tax for married gay couple.  Consult with a legal professional to document your intention(s) for survivorship and inheritance in a number of legal documents.  Additionally, be armed with the knowledge that a will directs how your assets will be distributed after you die and allows you to name a guardian for your children.  On the other hand, a recognizable living trust puts your assets in a trust with an appointed trustee who distributes you belongings after death.  The important distinction to note is that a living trust is more difficult to contest than a will, which can help avoid any question and subsequent lengthy and expensive legal process to settle the estate.  Another option is to create a Joint Testimate with Rights of Survivorship (“JTWROS”), which can protect against title speculation if one partner dies, although this has some negative tax implications as well.

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