Estate planning is an important piece of the wealth puzzle, but even the most qualified professionals struggle with it. That’s because it doesn’t just involve number-crunching; it requires the advice provider to wade into family dynamics, which can prove tense, heated, or ugly.
That difficulty is tough to overcome for traditional households with a matriarch and patriarch at the head. But according to a recent commentary from Zachary Lisak of Spiegel Sohmer in Quebec, it can be even tougher for LGBTQ clients.
“Only in a Protection Mandate can it be specified that your income and assets can be used for the benefit of another,” Lisak wrote. That means that on incapacity, an LGBTQ individual who wishes to allow their income or their home to be used for their partner’s benefit, it must be spelled out in the Protection Mandate.
“When the incapacitated partner is the breadwinner of the family, the financial consequences could be grave,” Lisak noted.
The question of succession planning is also critically important. Without a will, the law mandates that assets go to spouses and descendants and; in the absence of descendants, they will go siblings, nieces, and nephews to certain extents. Since many LGBTQ individuals are in common-law relationships, the demise of one partner without a will spelling out their wishes would leave the other without the right to an inheritance.
“To make matters worse, the legal definition of descendant does not include many young ones that LGBTQ individuals consider to be their children,” Lisak continued. The law dictates that a descendant is a child who is either connected by blood or is legally adopted. That means children born from a surrogacy arrangement, where only one or neither of the partners is actually connected by blood, fall through the cracks. In some cases, the birth parents remain in the picture as the LGBTQ couple raises the child as their own.
“It is clear that society has evolved significantly beyond the traditional view of descendants and family but the law has not caught up,” Lisak said. To protect their children to whom they want to leave an inheritance, LGBTQ couples can’t rely on intestacy rules or the legal definition of children; the only course is to draft a will that clearly names their heir- or heirs-to-be. As the family expands, the will should be revisited and revised accordingly.
Another critical situation arises when only one partner is the child’s legal parent. To clarify whom they would like to assume guardianship in case they pass on, the legal parent must make a clear designation through a last will and testament.
“Although the court will ultimately decide the guardianship of the child, such a designation provides a clear indication as to the parent's preference and in most cases is respected by the court,” Lisak said. “This goes far to prevent a scenario where the family of the deceased parent attempts to take the child away from the surviving LGBTQ partner.”
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